NCPA Calls CARS Program a Clunker

The Cash for Clunkers program cost the government $3 billion and did not accomplish the goals the program set out to accomplish, according to a report by the National Center for Policy Analysis.

"The Obama Administration implemented the program to reduce CO2 emissions, reduce Americans' dependence on imported oil, and improve urban air quality," said Todd Myers, NCPA adjunct scholar and co-author of the report. "Although there is evidence that removing older cars from the road will cut air pollution, the numbers indicate that any reduction in CO2 emissions or oil consumption would be minimal and expensive."

The cost of reducing emissions under the Cash for Clunkers program was much higher than a similar program in the European Union, according to the NCPA report. For example, if the average government subsidy is $4,000 under the Cash for Clunkers program, the cost per ton was nearly $162, which is more than eight times the cost on the European carbon market.

"The Cash for Clunkers program cost a great deal of money, most of which has not been reimbursed to the car dealerships that participated," said H. Sterling Burnett, NCPA senior fellow and co-author of the report. "This caused many auto retailers to withdraw from the program before it officially ended. It was foolish for the government to implement the program before they studied and confirmed how dealerships would be reimbursed and whether or not the program would have a positive effect on the environment."

"Congress had a good idea, but executed it poorly," Myers added. "It would have been more effective if the rebate could be applied toward the purchase of any vehicle with better fuel economy, including used cars. Many people with low incomes are unable to afford a new car, even with a rebate. A voucher would encourage people with low incomes to swap their 15- to 20-year-old cars for 5- to 7-year-old cars with better fuel economy and improved emissions technologies."

"Congress gave in to pressure to expand Cash for Clunkers despite the fact that it would accomplish little if anything to prevent climate change or reduce American's dependence on foreign oil," Burnett said. "Before Congress implements this program again in the future, it should have a clear picture of what it can realistically accomplish, and what the cost is relative to other policies that were used to reach the same goals."

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