Its official: Cash for Clunkers is a thing of the past. The federal auto scrappage program depleted its original funding almost three months sooner than anticipated. Actually, it blew through its original $1 billion dollars in funding by July 30th, requiring that congress appropriate an extra $2 billion to keep the program afloat.
Officially titled the Car Allowance Rebate System, the program was designed to provide economic incentives to U.S residents who purchase new, fuel efficient vehicles, and trade in their older model for scraps and recycling.
The miscalculation of duration notwithstanding, critics vary widely on their assessment of the programs successes. Authorities with the Department of Transportation call it a huge success. They argue it has helped boost economic growth by .4 percentage points and helped create an upwards 42,000 jobs. Additionally, the average fuel economy of newly purchase vehicles was 58 percent higher than those traded in by consumers.
Others have been less optimistic with the data. A report in The Examiner argues that the environmental benefit would actually be overshadowed by the fact that the people drive higher MPG vehicles for more miles. Then there is the number of secondhand carbon dioxide emissions that were emitted to support construction and distribution of the new vehicles. Critics also argue that the program stripped over 700,000 used vehicles off the road, and forced lower income consumers to pay higher prices.
But the program’s key blunder was in not restricting purchases to American automakers alone. Although designed to bolster Detroit’s sagging auto market, a report from the National Highway Traffic Safety Administration shows that the program was a bigger boon for Japanese automakers, in particular Toyota, who took the largest share of the trade-ins by selling nearly 1 out of every 5 cars.
How did Toyota react to the joyous news–by closing down the New United Motor Manufacturing plant in Fremont. The closure will cut 4,700 jobs directly, but analysts see more to dread on the horizon. The East Bay Economic Development Alliance estimates that the plant supported an additional 18,800 jobs and pulled an extra $904 million in incomes. Some of the production has been shifted to Texas, but most has gone overseas and across the border to Japan and Canada respectively.
I guess government officials weren’t talking about cars when they said clunkers.
