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Jeff Jacoby

The truth about ‘Cash for Clunkers’

By Jeff Jacoby
Globe Columnist / August 26, 2009

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Q: CONGRESSMAN, was “Cash for Clunkers’’ a success?

A: Of course it was! I’m surprised you’d even ask. “It has been successful beyond anybody’s imagination,’’ President Obama said last week. Secretary of Transportation Ray LaHood said he was thrilled “to be part of the best economic news story in America.’’ GM executive Mike DiGiovanni raved that “it really is all thumbs up,’’ a rare example of an undertaking “that is hard to find anything negative about.’’ If that’s not success, I don’t know what is.

Q: If it has been such a wonderful program, why did it end this week?

A: Well, nothing wonderful lasts forever. All the money available for rebates has been claimed, so the program has come to a close.

Q: But why close down “the best economic news story in America?’’ You extended it once; why not a second time? Why not keep it going forever?

A: You forget that Congress has other priorities too. Cash for Clunkers has been terrific for automobile dealers, but there is more to the economy than cars.

Q: Oh, you mean now you’re going to offer rebates to consumers who buy other things, like new couches or paint jobs or airplane tickets?

A: No, that wasn’t exactly what I -

Q: But aren’t those purchases as deserving of subsidies as cars? Surely Congress wants to help furniture dealers and house painters and airline employees too?

A: Yes, of course, but - I mean - well, let me think about that.

Q: By the way, if the “clunkers’’ program were really such a boon for the auto business, why did so many car dealers bail out of it?

A: “So many?’’ Don’t exaggerate!

Q: No exaggeration. The Associated Press reported that AutoNation, the largest dealership chain in America, pulled out of Cash for Clunkers last Thursday - three full days before the deadline. Automotive News ran a story about other dealers who found the government so difficult to deal with that they got out even earlier. “It’s just a mess, an absolute mess,’’ one of them said. Half of the Greater New York Automobile Dealers Association dropped out early. Does that sound like something the president should be calling “successful beyond anybody’s imagination’’?

A: OK, maybe there have been snafus with the government’s computers and whatnot, but you’re missing the forest for the trees: This has been an incredible shot in the arm for the economy! Thousands of jobs have been created or saved, and hundreds of thousands of cars were sold.

Q: But for every car sold, a car had to be destroyed. I understand why that might make GM happy. But how does the destruction of 750,000 used cars - all of which had to be in drivable condition to qualify for a rebate - help your constituents who can’t afford a new car? All this program did for them was guarantee that used cars will be more expensive. Poorer drivers will be penalized to subsidize new cars for wealthier drivers. Isn’t that immoral?

A: Look, there are trade-offs to everything. You’re overlooking all the benefits those new car sales will generate.

Q: No, I’m refusing to ignore all the costs that inevitably accompany those benefits. Congress and the administration took $3 billion from taxpayers in order to boost car sales. That’s $3 billion taxpayers will not be able to spend on groceries or tuition or a down-payment on a new house. Before you can credit Cash for Clunkers with the “multiplier effect’’ of those new-car sales, you have to charge it with a negative multiplier effect at least as great: all the jobs and growth and stimulus that won’t materialize because the government decided to spend $3 billion disabling, crushing, and shredding used cars instead. Don’t you see that everything government does, it does at someone’s expense?

A: You can say what you like, but this was a popular program.

Q: According to the polls, 54 percent of Americans opposed it. You call that popular?

A: I have to go, but let me say this: If Cash for Clunkers were as dubious as you suggest, it wouldn’t have had so many takers.

Q: Oh, for heaven’s sake, congressman: If you give away money, won’t people always line up to take it?

Jeff Jacoby can be reached at jacoby@globe.com.

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