Cash 4 Clunkers Wrapup
| Thu Aug. 27, 2009 2:09 PM PDT
Joe Romm says that although the Cash for Clunkers program was never meant to be a cost-effective way to reduce carbon emissions, in the end it turned out to be very effective indeed:
In the real world, the public has mostly turned in gas-guzzlers in exchange for fuel-efficient cars — which perhaps should not have been a total surprise since oil prices are rising, gas guzzlers remain a tough resell in the used car market, and most fuel-efficient cars are much cheaper than SUVs. So as a stimulus that saves oil while cutting CO2 for free — it has turned out to be a slam dunk, far better than I had expected.
....Let’s assume the new cars are driven nearly 20% more over the next 5 years [compared to the old cars they replace], and that the average price of gasoline over the next five years is $3.50. Then we’re “only” saving 140 million gallons a year or roughly $500 million a year. The $3 billion program “pays for itself” in oil savings in 6 years. And most of that oil savings is money that would have left the country, so it is a (small) secondary stimulus.
Using a rough estimate of 25 pounds of CO2 per gallon of gas (full lifecycle emissions), then we’re saving over 1.5 million metric tons of CO2 per year — and all of the ancillary urban air pollutants from those clunkers — for free.
I wouldn't make a habit out of supporting targeted industry programs like C4C, but it was wildly popular, provided a modest but noticeable amount of economic stimulus, and helps reduce U.S. oil consumption. Not bad for $3 billion.
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Comments
OT: page load speed
Submitted by karog on Thu Aug. 27, 2009 3:28 PM PDT.
Loading the Kevin Drum main page has been exceedingly slow. It did not used to be that way.
I finally figured out why.
It is very slow when I am signed in, averaging 14-17 seconds. When I am not signed in, it averages just over 2 seconds. So it takes about 5-7 times as long when signed in. (on a 20 Mb/s connection)
Kevin, could you pass this on to the appropriate folks in the hope they can improve this?
Thanks.
one known family that utilized the program is wealthy
Submitted by tpx on Thu Aug. 27, 2009 3:40 PM PDT.
The program was welfare for the rich, and the type that conservatives point to, after taking advantage of it themselves, of the hypocrisy of so-called liberals.
One known family that utilized the program is wealthy. They traded in the car they kept at their vacation home, the home on a golf course. They drove the car from the family home over 3,000 miles to leave as the new vacation house car and are driving their new car home. This family did not need assistance by the tax payers. The car traded in was driven very few miles annually and was in very good condition, although it probably did not burn good gas mileage.
This program did not exchange clunkers from the poor for high mileage, low emission autos because the poor cannot afford new automobiles. The autos that cause most air pollution, the ones owned by the poor, are still on the streets.
You must be a conservative
Submitted by idlemind on Thu Aug. 27, 2009 11:20 PM PDT.
There's a (poor) joke about how a conservative is a person who is obsessed that someone, somewhere, is getting more than they deserve. Yes, some people took advantage of the program to trade their old Hummers for new ones, or otherwise took unfair advantage of the program. Like Reagan's welfare queens, such cases were more common in rhetoric than in reality.
only those with decent incomes
Submitted by tpx on Fri Aug. 28, 2009 6:48 AM PDT.
I think it is safe to assume only those with decent incomes, excluding the working poor, were the only people able to take advantage of the program. Those who could not pass a credit check were certainly unable to use it.
I guess "pays for itself"
Submitted by ed (not verified) on Thu Aug. 27, 2009 4:29 PM PDT.
I guess "pays for itself" was in quotes, because the writer realizes that the program doesn't actually pay for itself at all?
Let's see...first, we "pay" a couple of thousand to somebody to help them get a new car. Then, that person is "paid" over the years in savings on gasoline.
I'm a taxpayer who already has a fuel efficient car...when do I get paid back?
My car gets 19mpg (which
Submitted by Anonymous (not verified) on Thu Aug. 27, 2009 4:56 PM PDT.
My car gets 19mpg (which surprises me, as I thought it was better than that.) But I was ineligible by 1mpg for a nice bailout from the taxpayers.
In 1982 when I graduated college, Reagan/Moynihan made sure I paid more in social security benefits than anyone else, and it has continued since that time.
I would not be eligible for a public health plan should there be a public health option.
I didn't get any of the bush tax cuts.
I bailed out the banksters and Kevin said that was a good thing.
Fuck all taxpayer bailouts of anything. Fuck it, and give me a gun petition to sign.
waaaa!
Submitted by Anonymous (not verified) on Thu Aug. 27, 2009 6:25 PM PDT.
Yeah, sometimes it's stinks being stuck with doing the right thing. How 'bout counting your blessings instead of boo-hooing about how no one is throwing money at you? e.g., I don't see "I'm in Iraq" on your list of self-centered complaints.
Not a question of whining.
Submitted by Anonymous (not verified) on Thu Aug. 27, 2009 8:55 PM PDT.
Not a question of whining. It's a question of your understanding how people over time get ground down and go from willing to do the right to just saying fuck it.
At this point, every program I see is a program that takes from me, and if you haven't noticed, now is not such a great time. Since you are yet another guy telling me I should just open up my wallet, allow me to tell you not to be shocked when I say, get fucked.
If you want a more egalitarian society, try seeking one out, and not seeking to benefit every special interest that comes along.
I feel your pain
Submitted by karog on Fri Aug. 28, 2009 6:17 AM PDT.
My 1989 Acura Legend needs replacement. It is rated at 18 mpg so I could qualify for C4C, right? Oops, that's for the automatic transmission. I have a manual that is rated at 19 mpg. In this regard it sucks to be me.
My income is very erratic. I make quite good money some years (too much to get the govenrment handouts) and nothing some other years (no income so no handouts).
However a government aid program is designed it is a high probabilty bet that I won't be included.
As frustrating as that can be sometimes, I remain a diehard liberal. I still want single payer universal healthcare (please, please include me in this one should it ever come about). I have been paying 100% for my own healthcare for the last 19 years. And the premiums are ever higher even as I try to restrain them with ever higher deductibles and co-payments. 8 more years to Medicare which will probably get gutted right about then. Sigh.
> At this point, every
Submitted by David Appell (not verified) on Fri Aug. 28, 2009 10:11 AM PDT.
> At this point, every program I see is a program that takes from me....
Just wondering if
* you take a deduction for the interest you pay on any mortgages?
* your employer deducts the cost of your health insurance?
* you ever received any federally backed loans for college?
etc.
Sigh. Fallaciously assumes
Submitted by Anonymous23 (not verified) on Thu Aug. 27, 2009 5:18 PM PDT.
Sigh.
Fallaciously assumes that none of those purchases would have occurred had the program not existed.
Decent stimulus questionale environment.
Submitted by Omega Centauri (not verified) on Thu Aug. 27, 2009 5:33 PM PDT.
It was pretty effective stimulus, as measured in the size of the bump to the economy per government dollar spent. It might even be a net positive for the government, i.e. additional tax revenues from a marginally stronger economy could exceed the headline cost to government. Yes, that is possible. I'd like to see an economist work through the data, until then though my statement is pure conjecture.
Great as a marginal decrease in US oil demand. That will help keep the dollar from tanking, and on the margin should keep the cost of oil (and gasoline) a bit lower. So Ed, there are several ways you *might* be benefitting:
(1) Maybe you keep your job because the stimulus saved the economy just enough that your job survived.
(2) Your investments in stocks, or whatever, did a bit better than otherwise would have been the case.
(3) If my conjecture above is proved true (I'm agnostic on this, I'll wait for the economists to work out the numbers), your future tax burden would be less.
(4) US CO2 emissions are a tad less. If the US does choose to participate in carbon abatement, the cost will be lower.
But, global emissions, which is what matters for climate changed, probably didn't go down. The oil we would have used for the junked clunkers, will be used by someone else -probably from the BRIC (Brasil Russia India China) countries. And it took energy and CO2 emissions to prematurely junk the clunkers, and build the new vehicles. When a commodity is supply limited as oil will be in the future, an incremental drop in (nominal) demand doesn't change global consumption, but it does lower the market price.
"but it was wildly
Submitted by Anonymous (not verified) on Thu Aug. 27, 2009 5:55 PM PDT.
"but it was wildly popular"
So we're the Bush Tax cuts. And for the same reason, bub.
This is an ideal program for
Submitted by Luther on Thu Aug. 27, 2009 6:53 PM PDT.
This is an ideal program for economists since there are so many unknown variables and perspectives that they can reach any conclusion depending on their liberal or conservative bias.
Where is the money coming from? China? Taxpayers? What is the effect on debt? Interest on debt? Willl the costs de-stimulate spending by non-carbuying taxpayers? Or de-stimulate spending of future generations who have to pay the bill plus interet? Is cash-for-clunkers a publicity boon for Toyota that will sound the death knell for GM? What is the magnitude of the de-stimulative effect of just destroying viable autos instead of putting them into the pre-driven market? This is wealth down the drain. So many questions.
Wrong Calculation
Submitted by Don K (not verified) on Fri Aug. 28, 2009 5:05 AM PDT.
The public benefit from reduced gas consumption as a result of this program has nothing to do with the price of gas (whether it's $3.50 or $1 or $5). That's internalized by the buyer. The benefit would be from the various externalities associated with gas consumption (lower CO2 emissions, lower emissions of other pollutants, others as one chooses to account for them), and it would be coincidental in the extreme if those just happened to price out to $3.50 per gallon.
Now the design of the program was silly to the extent the clunker had to be rated below some gas mileage standard. It seems to me replacing an older Camry with a new Prius (or an older Fusion with a Fusion Hybrid) would be pretty worthwhile, but that didn't qualify (and this isn't a matter of self-interest - my car is only one year old, and I'm satisfied with its mileage, so I wasn't in the market now no matter what).
As a way of penalizing people how already kind of did the right thing, it reminds me of the response of Bay Area water authorities to a drought back in the 80's. They mandated an across the board 20% (or some such) reduction in water usage. Families who had done nothing to save water had lots of low-hanging fruit, while those who had already changed out toilets and shower heads and had planted drought-tolerant plantings were kind of fucked - they had to find yet another 20%.
What's the justification for
Submitted by Julene (not verified) on Fri Aug. 28, 2009 10:49 AM PDT.
What's the justification for assuming these new cars would be used 20% more? Other than inflating the CO2 and other savings...
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