Cash for Clunkers cost taxpayers $24,000 per real sale

posted at 3:35 pm on October 29, 2009 by Ed Morrissey

The Cash for Clunkers program provided federal subsidies of up to $4500 for those car owners willing to buy a more fuel-efficient vehicle in exchange for certain classes of gas guzzlers.  In all, the C4C program generated over 690,000 sales in the few weeks that it ran, with an average subsidy of $4,348 per sale.  How many of these, though, would have bought a new car in the near future anyway?  According to a new study by Edmonds, an industry analyst, only 125,000 of these sales would have not been made without C4C — which brings the subsidy to about $24,000 per actual successful incentive (via Snapped Shot):

What happened?

Well, it’s in how Edmunds crunched the numbers. A valid way to evaluate the program economically, it says, is to look at how many people purchased cars that otherwise wouldn’t have been bought. The firm says that number is about 125,000 cars. By that measure, the government spent $24,000 to generate each sale of a new car.

For comparison, the average price for a new vehicle in August 2009 was $26,915, minus an average cash rebate of $1,667.

In all, the government spent $3 billion on a program that provided cash toward 690,000 car purchases – about $4,348 per car. That makes 565,000 people who got as much as $4,500 to buy a car they would have bought anyway, according to the Edmunds analysis.

Of course, that may be chicken feed, considering the great press the Obama administration will get for its boost to GDP from the C4C program.  Estimates put that at 1.66% annualized for the third quarter, or close to half of the GDP growth.  The boost in new home sales and construction eat up a big chunk of what’s left in the 3.5% GDP growth figure, which is also expiring.

In the end, almost all C4C did was steal sales from the new model year.   Dealers unloaded last year’s models, and their new inventory will sit on the lots without the buyers they may have had otherwise.  The destruction of used cars will make it more difficult for lower-income earners to buy vehicles, thanks to a shortage of about 700,000 in the national inventory. That will impact employment and consumer spending indirectly, which will mean a drag on future GDP growth.

Meanwhile, we spent almost as much to buy an average new car to incentivize each legitimate new sale.  Is this smart economic management?  Or is this yet another data point that proves that this administration has no idea how a free-market economy works, and even less idea of how a top-down managed economy fails?


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Comment pages: 1 2

The hits just keep on comin’. The tipping point for Barrys supporters is coming as evidence of his incompetence mounts.

BHO Jonestown on October 29, 2009 at 5:11 PM

Jimmy Carter B Hussein 0
A Failure As a President and an Embarrassment as a Former current President

When will a website be built to compare Zer0 to Jimmuh?

OmahaConservative on October 29, 2009 at 5:17 PM

I guess AnninCA took her Govt cheese and went home. Shocker.

Monica on October 29, 2009 at 5:26 PM

It’s all fake. Every single bit of it. “Stimulus” made of borrowed money is a pie-in-the-sky scam. The car sales, the spike in GDP, Porkulus are just sleight of hand tricks to make people feel good. Typical libtard: “SEE?? WE DID SOMETHING!!”

Dominion on October 29, 2009 at 5:29 PM

Same crap happening with the housing credit, just with a boatload more fraud. Many believe it’s spurring sales that would occur anyway and, due to light reporting requirements, it’s going to thieves and 4-year olds.

redfoxbluestate on October 29, 2009 at 5:31 PM

I trust that this will put Edmonds.com on Obams’a list

galtg on October 29, 2009 at 5:39 PM

It’s all fake. Every single bit of it. “Stimulus” made of borrowed money is a pie-in-the-sky scam. The car sales, the spike in GDP, Porkulus are just sleight of hand tricks to make people feel good. Typical libtard: “SEE?? WE DID SOMETHING!!”

Dominion on October 29, 2009 at 5:29 PM

Actually the entire concept of government money is a scam. The government does not have any money. They are trillions overdrawn at your grandchildren’s bank account. Whatever money they gave anyone, for anything, is money they are taking from you, and me. The government does not even have any other way to get money, except to print it.

MikeA on October 29, 2009 at 5:47 PM

This new Obamao Automotive initiative takes real brass ball (bearings). When you check out who will benefit from this “green” luxury car “investment,” you will go out of orbit.
http://planetgore.nationalreview.com/post/?q=ZjEzNjNmZDNkNWM0ODI0M2U2ZGRlYzg2MjAxMGJmNzE=

onlineanalyst on October 29, 2009 at 6:02 PM

Personally, I think we all should be excited that AnninCA stays on this message board. It is a great opportunity to educate her about conservative principles and limited government. I know that she has been corrupted by liberalism but the only way to defeat it is to educate people to our side. I’ve been watching her thinking evolve over the last few weeks and I can sense that she is starting to see the light on some topics. Let’s not lose her. She could be a great foot soldier against liberalism.
Peace.

frizzyb on October 29, 2009 at 6:05 PM

WHERE’S MY FREAKING CAMARO? I WANT MY FREAKING CAMARO!!!!! I’M PAYING FOR IT! %@#&%**%$#!

I feel better now.

jimmy2shoes on October 29, 2009 at 6:15 PM

Robust!

redwhiteblue on October 29, 2009 at 6:52 PM

We’ll have a Freddie/Fannie for car sales soon enough. If you can qualify for a Corolla, you can up-grade to an LS-460. If you can only afford to ride the bus, you will be issued an Acura RL. Then again, it will probably only apply to a GM, or Chrysler product, the new “Peoples Car”.

These people are bent on collapsing America, strait up!

M-14 2go on October 29, 2009 at 7:00 PM

Personally, I think we all should be excited that AnninCA stays on this message board. It is a great opportunity to educate her about conservative principles and limited government.
frizzyb on October 29, 2009 at 6:05 PM

I hate to bust your little bubble there, pal, but I’m afraid none of these trolls are REALLY earnest six-year-olds furrowing their little brows and trying to figure out how the real world works.

Liberals only appear to be children. Narcissism is a perfectly natural and health survival mechanism for the very young. In an adult person, it is a completely different beast.

When someone goes all the way through physical adolescense and still retains those infantile behavior patterns, it’s not because he’s just a little slow to develop. At some point in life, people take one of two paths. And once that choice is made, people stick with it.

A physical child’s mind is flexible, because it is in the process of growing. But with adult liberals it is the exact OPPOSITE. Every day that passes leaves the liberal ever more rabidly set in his view of his own feelings as the center of the Universe.

No liberal ever feels himself to be “wrong”; everyone else is simply “mean” because we don’t accept him. And every new experience he encounters constitutes yet another justification of that view.

A liberal could not possibly care less about BEING wrong. That is an objective concept; it is literally inconceivable to the subjective mind. All any liberal ever cares about is FEELING wrong. And that means they are motivated not by curiosity, but by fear.

The trolls read the posts here and become more self-righteous and enraged with each one. In their minds, we are “mean” to them, not because we have ideas they can dispute in anything even remotely like a coherent fashion, but because we invalidate their all-important FEELINGS.

They learn, sure, but what they learn is the exact same lesson over and over again. And it has nothing whatsoever to do with the one you think you’re teaching them.

logis on October 29, 2009 at 7:26 PM

FED up.

realitycheck on October 29, 2009 at 11:47 PM

meanwhile Ford rules

and gm and chrysler with the full backing of the commies are coming apart much like shitty soviet garbage

it pisses me off that the CinC is not much wiser than my 6 year old

Sonosam on October 30, 2009 at 2:52 AM

This corrupt, vile administration knows exactly how the free market system works, Ed. They are doing everything in their power to dismantle it. Thus far they are doing quite well.

SKYFOX on October 30, 2009 at 9:46 AM

I trust that this will put Edmonds.com on Obams’a list

galtg on October 29, 2009 at 5:39 PM

Well it’s not like they are a real NEWS organization or anything.

Lily on October 30, 2009 at 11:28 AM

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