Clunker of a program gets clunky results
The Wall Street Journal editorial board weighs in on the aftermath of the “Cash for Clunkers” program, taking issue with Transportation Secretary Ray LaHood’s August statement that “[Cash for Clunkers] is the one stimulus program that seems to be working better than just about any other program.”As the editorial board puts it, “If that’s true, heaven help the other programs.” The Journal explains that new car sales for September, after the clunkers program ended, sank by 25% from a year earlier. As the Journal notes, “Some 700,000 cars were sold in the summer under the program as buyers received up to $4500 to buy a new car they would probably have purchased anyway, so all the program seems to have done is steal those sales from the future. Exactly as critics predicted.”
Rick Nelson commented:
Kevin--If the August 2009 clunkers program turns out to have stolen purchases from a booming August 2010 or 2011, then I would agree with you. If it stole sales from September 2009, then not so much.
Tkeoki commented:
If it only 'steals' purchases that would have happened anyway within the negative economic downturn, then the program wouldn't have been beneficial.
If it manages to 'steal' sales from further in the future when the economy is getting back on track, then the program would have been helpful.
My opinion is that it's more the former and less the latter.
Kevin commented:
Well of course it steals purchases from the future. Duh. Everyone knows that. And that is exactly what you need to do to short circuit a recession. In a recession everyone gets worried and puts their cash into the bank and pushes purchases way out into the future, causing industries to have trouble, more layoffs, etc. Bringing those purchases from the future to now will even out the bumps, save our industry from hollowing out, and making sure that there is a actually an industry ready and waiting for when the economy rebounds.
So yes, this did what was expected. And we are glad for it!
