New Studies Suggest ‘Cash For Clunkers’ Ineffective As Economic Stimulus




A new analysis from the Brookings Institution, a private nonprofit organization devoted to independent research and innovative policy solutions (www.brookings.edu), found the Cash for Clunkers initiative was inefficient as an economic stimulus and only pulled forward auto sales that would have happened regardless of the Cash for Clunkers initiative.

The study suggests that 700,000 old cars and trucks were traded in between July 1 and Aug. 24, 2009, but that consumers just bought cars slightly earlier than they would have without the Cash for Clunkers initiative. The study also states cumulative purchases over the year were unchanged.

Researchers Ted Gayer and Emily Parker stated pushing the vehicle sales boosted economic growth by $2 billion and created about 2,050 jobs, but that the program cost $1.4 million per job created - being less effective than other stimulus measures.

The study concluded that the U.S. vehicle fleet’s overall efficiency improved and carbon dioxide emissions were cut by 8.58 million to 28.3 million tons. Gayer and Parker suggested this was an inefficient way to reduce emissions because it costs between $91 and $301 per ton of carbon avoided. They determined that “in the event of a future economic recession, we would not recommend repeating the program.”

The Automotive Service Association (ASA) released information about the findings on its website, www.takingthehill.com. The group did not support the Cash for Clunkers initiative and encourages its members to send a letter to alert members of the U.S. House of Representatives and U.S. Senate as to the failure of the Cash for Clunkers program. The ASA is the largest not-for-profit trade association of its kind dedicated to and governed by independent automotive service and repair professionals. ASA serves an international membership base that includes numerous affiliate, state and chapter groups from both the mechanical and collision repair segments of the automotive service industry.

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