Another day, another failed Obama program.
In a report released last week, they found that the $2.85 billion, 2-month program essentially merely time-shifted the purchase of new vehicles forward a few months (H/T – Kevin Binversie). From the conclusion of the research paper:
The primary motivation for the CARS program was to provide temporary stimulus to counter the economic contraction that was occurring at that time, while also reducing fuel consumption and thus emissions. The evidence suggests that the program did indeed incentivize the sale of more fuel efficient vehicles by pulling sales forward from the near-term future. This resulted in a small and short-lived increase in production, GDP, and job creation. However, the implied cost per job created was much higher than alternative fiscal stimulus policies. Further, these small stimulus effects do not account for the depletion of the capital stock that resulted from the destruction of used vehicles….
The CARS program led to a slight improvement in fuel economy and some reduction in carbon emissions. The cost per ton of carbon dioxide reduced from the program suggests that the program was not a cost-effective way to reduce emissions, although was more cost effective than some other environmental policies, such as the tax subsidy for electric vehicles or the tax credit for ethanol.
One thing I noticed this year was the insane cost of used cars. Five years ago I bought a four year old SUV with 65,000 miles on it for 13,000. Something comparable today in halfway decent condition with similar or less mileage? 20k if I was lucky. Well, if you destroy half the used inventory out there for no good reason other than some mythical carbon reduction, guess what happens to prices? You kids out there getting your first car? Good luck.
If the best you can say about this program is that it didn't stink as bad as the electric vehicles subsidy, well that's a failure.
I leave you with a poor Volvo meeting its end for the sin of being a good car that used slightly too much gas.
If we take into account the life left in that car and the time, energy, and resources to create a new car to replace it, plus the extra energy and carbon a person would burn to earn the extra money to afford it, how can we say we saved anything?