Published: June 26, 2009 02:44 pm      

Few benefits — 06/28/09

Expect ‘cash for clunkers’ to deliver far less than promised

On paper, the “cash for clunkers” program approved by Congress looks good, a way to get gas-guzzling older cars off the highways and to encourage new car sales at a time when they are most needed. In practice, we suspect the $1 billion program will deliver far less than promised

The funding for the program was included in a $106 billion measure to pay for the wars in Iraq and Afghanistan. Never mind that there is no connection between fighting the two wars and getting gas-guzzlers off the road. Unable to get Congress to enact “cash for clunkers” on its own merits, Democrats who supported the program put funding for it in an unrelated bill that was certain to be approved. It’s an old trick in Congress that annually results in billions of dollars in wasted spending.

Under the program, the government is offering to pay from $3,500 to $4,500 as an incentive to get car owners to trade in their old cars, up to 25 years old, for newer, more fuel-efficient, less-polluting vehicles.

Even supporters admit that the program’s impact on overall fuel consumption and pollution is likely to be minimal. However, it could generate up to $250,000 in sales of new vehicles. While that’s not an insignificant number, it’s hardly enough to turn an auto industry that has seen sales plummet from 16 million in 2007 to expected sales of less than 10 million this year.

Consider this: Who is most likely to drive the old, gas-guzzling clunkers? Many of the owners are families living in modest incomes who are unable to afford new vehicles. They would much prefer a new used model that better fits their price range. But the program includes no incentives for cashing in a old clunker for a newer used car — even one that is more fuel efficient.

“Cash for clunkers” will benefit the automakers, the dealers and people who were probably going to trade in their car anyway. But those who drive the real clunkers won’t be helped.