The title of an AP story posted on the Argus Leader site proclaims, “Cash for Clunkers ends under its $3 billion budget.”
Hooray! A government program ended under budget! Well, not exactly.
It actually ended 3 times OVER its original budget. The program was originally allocated $1 billion, but blew through that in about a week. In response, Congress approved spending another $2 billion of the public’s money that doesn’t exist to keep the program going a few weeks longer.
Imagine that your clunker is having engine problems. You budget $1000 cash for repairs. You drop it off at the mechanic, but he calls you later saying he thinks it’s going to cost $3000. Later, you go in to pick up your vehicle and the bill is “only” $2900. Is that coming in under budget?
My analogy above isn’t perfect. In the analogy it is clear that something was accomplished in spite of the costs; your broken clunker was repaired. But, with the “Cash for Clunkers” program, touted to boost the economy while lowering carbon emissions, it’s hard to say if anything beneficial was achieved.
This program didn’t create any new demand for cars. It only shifted inevitable purchases forward. In the near term expect new car purchases to stagnate, and we’ll be back to where we started.
If the government was serious about reducing emissions it wouldn’t have wasted our money on the “Cash for Clunkers” program which may only provide negligible effects. For example, it could have used the $3 billion to buy 3 (at least) existing coal plants and shut them down permanently. Or, it could have built a couple of no-emission nuclear plants and ran them cleanly for decades. Either way it could have gotten much more bang-for-the-buck in reducing emissions by pursuing other options.
“Cash for Clunkers” was a poorly conceived program which failed to achieve any lasting benefits and was successful only in dragging our country $3 billion deeper in debt.
*Your actual results may vary.