Research

Another Stimulus Failure For The Books: Cash For Clunkers

The Hill Headline: “Study: ‘Cash For Clunkers’ Clunked” (Keith Lang, “Study: ‘Cash For Clunkers’ Clunked,” The Hill’s Transportation Report, 10/30/13)

“As A Job Creator, The Obama Administration’s Cash For Clunkers Program Was A Sputtering Old Jalopy That Deserves To Stay In The Scrap Yard, According To A Study Released Wednesday.” (Kevin Robillard, “Brookings: Cash For Clunkers Was A Lemon,” Politico, 10/30/13)

According To The Brookings Study, Cash For Clunkers Cost $1.4 Million Per Job Created. “Similarly, Li, Linn, and Spiller (2012) find a minimal increase in employment due to the CARS program. They estimate an additional 3,676 job years from June through December 2009, split between the assembly and parts industries. Over the longer term through May 2010, they find a net increase of only 2,050 job years. Figure 13 shows cost per job created by the CARS program compared to a number of other policy options evaluated by the Congressional Budget Office (2010). Using Li, Linn, and Spiller’s (2012) long-term jobs estimate for the CARS program, the program created 0.7 jobs for each million dollars of program cost, resulting in a cost of $1.4 million per job created.” (Ted Grayer and Emily Parker, “Cash For Clunkers: An Evaluation Of The Car Allowance Rebate System,” The Brookings Institution, 10/31/13)

  • “The Final Taxpayer Cost Of The CARS Program Was $2.85 Billion.” “Congress budgeted $3 billion in total for the program, but the full amount was not used because the program ended based on what proved to be a conservative estimate of when the funds would be exhausted. The final taxpayer cost of the CARS program was $2.85 billion.” (Ted Grayer and Emily Parker, “Cash For Clunkers: An Evaluation Of The Car Allowance Rebate System,” The Brookings Institution, 10/31/13) 

The Brookings Report Shows That Cash For Clunkers Benefitted Wealthier Participants In The Program Rather Than Low-Income Participants. “In terms of distributional effects, compared to households that purchased a new or used vehicle in 2009 without a voucher, CARS program participants had a higher before-tax income, were older, more likely to be white, more likely to own a home, and more likely to have a high-school and a college degree.” (Ted Grayer and Emily Parker, “Cash For Clunkers: An Evaluation Of The Car Allowance Rebate System,” The Brookings Institution, 10/31/13)

Brookings Report: Though Cash For Clunkers Was Also Intended To Be A Carbon Emissions Reducer, The Cost Per Ton Of Carbon Dioxide Reduced Far Exceeded The Social Cost Of Carbon Itself. “Li, Linn, and Spiller’s (2012) estimated reductions in carbon dioxide emissions (including the co-benefit reduction in carbon monoxide, volatile organic compounds, nitrogen oxides, and exhaust particulates) amounts to a cost per ton of carbon dioxide of $91 to $301 stemming from the program. For comparison, Figure 15 shows estimates of the cost per ton of carbon dioxide reduced for a handful of alternative environmental policies. It also includes the estimated social cost of carbon, which is meant to capture the total external cost of a ton of carbon dioxide emitted, and is used by the administration in regulatory impact assessments or proposed regulations. The cost per ton of carbon dioxide reduced by the CARS program far exceeds the estimated social cost of carbon, suggesting it is an inefficient approach to reducing emissions.” (Ted Grayer and Emily Parker, “Cash For Clunkers: An Evaluation Of The Car Allowance Rebate System,” The Brookings Institution, 10/31/13)

Brookings Report: The Program Resulted In A Negligible Reduction In Gasoline Usage. “Total emissions reduction was not substantial because only about half a percent of all vehicles in the United States were the new, more energy-efficient CARS vehicles. The program resulted in a small gasoline reduction equivalent only to about 2 to 8 days’ worth of current usage.” (Ted Grayer and Emily Parker, “Cash For Clunkers: An Evaluation Of The Car Allowance Rebate System,” The Brookings Institution, 10/31/13)

The Brookings Report Confirms GOP Criticism Of The Program All Along

A 2011 Report Confirmed Cash For Clunkers Opponents Were Right And “The Actual Benefits Of The Program Were Pretty Meager.” “So were the naysayers right? It seems so. A newly updated analysis from economists at Resources for the Future finds that the actual benefits of the program were pretty meager. The paper examined U.S. car sales using trends in Canada as a control group, and estimated that about 45 percent of cash-for-clunker vouchers went to consumers who would have bought new cars anyway.” (Brad Plumer, “Was ‘Cash For Clunkers’ A Clunker?” The Washington Post’s “Wonk Blog,” 11/5/11)

The Most Common Swap Under The Cash For Clunkers Program Was To Trade In Old Pickups For New Pickup Trucks “That Got Only Marginally Better Gas Mileage.” “The most common deals under the government’s $3 billion Cash for Clunkers program, aimed at putting more fuel-efficient cars on the road, replaced old Ford or Chevrolet pickups with new ones that got only marginally better gas mileage, according to an analysis of new federal data by The Associated Press.” (“Clunker Deals: Old Ford Pickups For New Ones,” The Associated Press, 11/4/09)

  • More Than 4 Out Of Every 5 Cars Sold Under Cash For Clunkers Would Have Been Sold Anyways, With Taxpayers Ended Up Spending $24,000 Per Vehicle Sold. “A total of 690,000 new vehicles were sold under the Cash for Clunkers program last summer, but only 125,000 of those were vehicles that would not have been sold anyway, according to an analysis released Wednesday by the automotive Web site Edmunds.com … The average rebate was $4,000. But the overwhelming majority of sales would have taken place anyway at some time in the last half of 2009, according to Edmunds.com. That means the government ended up spending about $24,000 each for those 125,000 additional vehicle sales.”  (Peter Valdes-Dapena, “Clunkers: Taxpayers Paid $24,000 Per Car,” CNNMoney, 10/29/09)