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  • New Study Says Cash for Clunkers Was … a Clunker

    The White House hailed last year’s “cash for clunkers” program as a successful government initiative that stimulated the economy, particularly the ailing auto industry. It provided $3,500–$4,500 rebates to consumers who purchase more fuel efficient cars and trade in their old vehicles, which dealerships then destroyed.

    President Obama’s economic team said cash for clunkers lured consumers who would have bought a new car two to three years in the future into the immediate market. However, a new study from economists Amir Sufi of the University of Chicago and Atif Mian of University of California-Berkeley suggests otherwise. According to NPR:

    The government’s “cash for clunkers” program boosted auto sales by 360,000 during the two months it was in place, according to a new study. But in the seven months that followed, sales were down by 360,000 compared to what they would have been without the program, the study found.

    The implication: The program didn’t bring new buyers into the market. But it encouraged people who would have bought a car anyway to make their purchase a few months sooner.

    Although it’s impossible to know what the economy would have done absent cash-for-clunkers, the authors of the study attempted to do so by analyzing “parts of the U.S. where, for one reason or another, there were almost no clunkers on the road when the program took effect. By comparing sales in those areas to sales in more clunker-rich parts of the country, they were able to estimate the program’s effects.”

    New auto sales reports show that August 2010 sales are down 21 percent from August 2009, which included the cash-for-clunkers program. For those who couldn’t afford to take advantage of the taxpayer-funded subsidy for the purchase of a new vehicle, the news is also grim. The reduction in the supply of used cars—partly from destruction of traded-in vehicles and partly because new car sales are down—has driven up used car prices. The prices of some models have risen as much as 30 percent, and even the smaller models are up 10 percent. So by what measure can this program be called a success?

    Posted in Economics [slideshow_deploy]

    7 Responses to New Study Says Cash for Clunkers Was … a Clunker

    1. Billie says:

      I don't know anyone that didn't know it would come to this except the left and obamkins. They're dangerous.

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    3. Scrap Iron Houston T says:

      I have seen (at dealer auto auctions) increasing prices on used cars. And there is a definite decrease in the number of cars available.

      Isn't it obvious? Government intervention in the open market NEVER produces the desired results,no matter the "good intentions" of the plan.

    4. Chris Denning, Tular says:

      But the government intervention accomplished exactly what they wanted, to get the old cars off the road, destroy wealth, and make us all poorer. We have no right to have a prosperous standard of living while there are people starving in Africa don't you know. They want us to cry out to the government to save us and make us willing to give up more and more freedom faster and faster. When we become a Third World country they will be happy, as long as they remain in power and retain their own high standard of living.

    5. Raymond says:

      I am just curious?? Is there Harvard University branch in Nairobi, Kenya? I just wondering, perhaps, Obama has graduated, instead, at Harvard Kenya. hahahahahah! Anyway, guys, it is only about 68 days before November 2010 elections. The skies in the lower 48 and in Alaska will soon be again bright red…hahahahaha! Most of us were deceived by the leftist media (CNN, ABC. CBS and MSNBC) last November 2008. I hope this year and on 2012, the same deception and manipulation will not happen again. WE MUST LEARN FROM OUR MISTAKES;otherwise, United States will cease to exist.

    6. Pingback: Top Ten Reasons America Won’t Miss the 111th Congress | The Conservative Papers

    7. Aaron43 says:

      This program was a disaster. It took used cards off the market which young adults and poor people could have bought as their first time purchase of a car. It took savaged used parts off the market which could have been used to repair cars which were inoperatable. It was not targeted precisive enough to get the real gas guslers off the road such as SUV's and luxury cars. Many of the clunkers I saw on the trade-in lots did not comply with the program because I know some of the them were capable of getting more than 25 miles per gallon. Hence, this appears to be fraud by some auto dealers.

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