Researchers: 'Cash for Clunkers' Was a Policy Edsel

The program was a drag on the economy.


WASHINGTON –  The government's "Cash for Clunkers" program – pitched as a plan to jump-start U.S. auto sales and clean up the environment by getting gas-guzzling vehicles off the road—may have been a clunker itself, according to a new economic study.

Researchers at Texas A&M, in a recently released report, measured the impact of Cash for Clunkers on sales and found the program actually decreased industry revenue by $3 billion over a nine-to-11-month period. Meanwhile, the "stimulus" also cost taxpayers $3 billion.

NEXT: Sucking the Life Out of Detroit—With a New Sports Stadium

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  1. So it took three Texas A&M economists 5 years of research to come to the same conclusion it took me five minutes to come to after hearing the proposal for Cash for Clunkers.

    Way to go, fellas!

    1. I kinda wanna find the guys that are doing the ‘Did it have a beneficial impact on the environment?’ study and mail them a letter that says ‘Do not open until the study is completed’ on the outside and ‘Nope.’ on the inside.

    2. You forgot to add that the government also probably gave them grant money for this study.

      1. That rat hole isn’t close to being filled.

  2. At the time, since we were also bailing out GM & Chrysler, I said that the government ought to just give every American household a new car. I mean, the taxpayers were already paying for the cars and the Democrats just hAAAAAAAd to get the old ones off the road, right?

    But no, that idea was just too sensible.

  3. BTW: Did anyone ever find out who owned the company that made the fluid car dealers had to buy and use to blow up the engines in the clunkers?

    I believe it was located in the Chicago area.

    1. “I believe it was located in the Chicago area.”

      Somehow, that is not surprising.

  4. We also find the program’s fuel efficiency restrictions induced households to purchase more fuel efficient but less expensive vehicles, thereby reducing industry revenues by three billion dollars over the entire nine to eleven month period.

    So people responded to recession-era incentives by buying light-weight, recession-friendly cars, which it turns out are less profitable for manufacturers.

    And I’d wager they’re also significantly less safe than the heavier gas guzzlers traded in. I’d be interested in seeing a study guesstimating how many lives have been lost, if any, due to flimsier, fuel-efficent clown cars on the road in greater numbers.

  5. If you give cash for worthless stuff, won’t your cash become worthless stuff eventually?

    1. Why, yes. Yes it will.
      Germany proved this in the early 20th century, Zimbabwe is doing so now.

  6. Not to mention destroying plenty of perfectly fine older vehicles that had a years of life remaining. This was one of the great examples that economists truly do not understand either thermodynamics. Or economics.

Please to post comments

Comments are closed.