Posted by Jonathan Adler:
Clunk:
http://volokh.com/archives/archive_2009_08_02-2009_08_08.shtml#1249333736
"Cash for Clunkers" is an amazingly successful stimulus program,
right? How else to explain its immense popularity? Not so fast.
Congress budgeted $1 billion to to provide car-buyers of rebates up to
$4,500 when trading in a qualifying older vehicle for a new, more
fuel-efficient one. The money was supposed to last into November, but
it's already gone. Does this mean it worked? Not necessarily. As
[1]Jeremy Anwyl of Edmonds.com explains, it appears the program
shoe-horned months worth of car sales into a week or two, and may not
have increased overall car sales much at all.
I love a good sales surge as much as anyone. But it�s not that
simple. First, it�s not clear that cash for clunkers actually
increased sales. Edmunds.com noted recently that over 100,000
buyers put their purchases on hold waiting for the program to
launch. Once consumers could start cashing in on July 24, showrooms
were flooded and government servers were overwhelmed as the backlog
of buyers finalized their purchases.
Secondly, on July 27, Edmunds.com published an analysis showing
that in any given month 60,000 to 70,000 �clunker-like� deals
happen with no government program in place. The 200,000-plus deals
the government was originally prepared to fund through the
program�s Nov. 1 end date were about the �natural� clunker trade-in
rate.
Clearly, cash for clunkers was underfunded from the start.
Consumers quickly figured that out and rushed to take advantage
before funding ran out.
This sales frenzy was inevitable. We have crammed three to four
months of normal activity into just a few days.
While automakers may like the program, there's little reason to
believe it will contribute to an economic recovery -- and even less
reason to think the program needs another $2 billion, as approved by
the House of Representatives. More from the [2]WSJ and [3]Derek
Thompson.
References
1.
http://online.wsj.com/article/SB10001424052970204619004574324350084909302.html
2.
http://online.wsj.com/article/SB10001424052970204313604574326531645819464.html
3.
http://politics.theatlantic.com/2009/08/the_senate_should_kill_cash_for_clunkers.php
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