When the feds ran their “cash-for-clunkers” program in the last decade, the pathetic results and attendant ridicule should have put an end to this madness. I wrote a column on this federal folly in 2012. Here’s the link — and I’ve included the column at the bottom of this post.
The federal madness ended with the Obama administration lamely claiming “mission accomplished,” and the results have largely been forgotten. But in Left Coast California, no lesson was learned. Our state-grown version of this boondoggle lurches on. Not surprisingly, the results are far worse than the disastrous federal program!
BOTTOM LINE: The rough cost of carbon dioxide “pollution” (CO2 is NOT a pollutant, but let’s move on) is about $40 a ton (or less).
But the cost of the CA vehicle RETIREMENT aspect of the program is estimated to cost a huge $19,000 per ton of “pollution” it saves. The REPLACEMENT portion of the program is even MORE expensive — $43,000 a ton.
Oh, one other thing. From what I can glean from the materials, this ridiculous cost per ton of CO2 reduction counts ONLY the direct taxpayer subsidies. NOT included are the considerable state program administrative costs (or benefits, if you are a public employee labor union boss).
Assessing the Effectiveness of the Cash-for-Clunkers Program in California
June 18, 2014
California is hoping to reduce air pollution by paying drivers to scrap older, polluting cars and purchase new, “cleaner” models, reports Bre Payton for the Daily Signal, but the program has had very limited success so far.
The idea behind the state’s Cash-for-Clunkers program is to incentivize Californians to buy new cars and get rid of their older, environmentally-damaging vehicles, which cause the majority of California’s air pollution. However, in the program’s first year, a mere 21 drivers purchased a new vehicle through the program, as many were discouraged by the program’s low cash incentives and complicated processes.
But as Randall O’Toole of the Cato Institute has said, cash-for-clunkers programs are an inefficient, costly means to speed up the natural process of replacing older cars with more fuel-efficient models.
The state’s vehicle modernization initiative also includes a vehicle retirement program, which appears to have enjoyed some success, having retired more than 86,000 vehicles since 2010. However, more than 60 percent of vehicles retired through the program were unregistered, meaning they were not being driven on the road and, therefore, were not causing much air pollution.
Furthermore, the program is far from cost-effective. It is estimated that the vehicle retirement aspect of the program will cost $19,000 for every ton of pollution that it reduces. The replacement portion of the program is even more expensive, at $43,000 per ton.
Source: Bre Payton, “California Can’t Convince Drivers to Trade in Clunkers for Cash,” Daily Signal, June 15, 2014.
Here’s my 2012 column on the fed’s clunker program:
FEBRUARY 24, 2012 10:44AM
Let’s recall Obama’s “Cash for Clunkers” brain fart
Republicans would be wise to remind folks of the disastrous “cash for clunkers” Obama brain fart — a singularly idiotic program that later died a quiet (though costly) death. While Obama has been adroit in blaming Bush for all his problems, this nutty subsidy was home grown in Obama’s fertile mind alone — and tells us much regarding his economic acumen.
Here’s a column I wrote (including part of a George Will column) on this topic in September, 2010:
Obama’s “Cash-for-Clunkers” was a lemon
by Richard Rider
Columnist George Will wrote a fine column that effectively challenged Obama’s assertion that we can trust his judgment concerning economics. On the one year anniversary of the infamous “Cash for Clunkers” program, Will reviewed the results. And what a disaster it was.
The clunker school of economics
by George Will
. . .
The used-car market is an important mechanism for redistributing wealth to low-income persons: The price of a car drops when it is driven out of the dealership, but much of its transportation value remains when it enters the used-car market. Unfortunately for low-income people, the average price of a 3-year-old automobile has increased more than 10 percent since last summer. This is largely because the Car Allowance Rebate System, aka “Cash for Clunkers,” which ended in late August 2009, cut the supply of used cars.
Cash for Clunkers provided up to $4,500 to persons who traded in a car in order to purchase a new car with better gas mileage, but stipulated that the used car had to be scrapped. The Boston Globe’s Jeff Jacoby reports that a study by Edmunds.com shows that all but 125,000 of the 700,000 cars sold during the clunkers program would have been bought even if no subsidy had been available. If this is so, each incremental sale cost taxpayers $24,000.
Even on environmental grounds, the program was, Jacoby argues, “an exorbitant dud”: The reduction in carbon dioxide from removing older cars from the road cost, according to research at UC Davis, $237 a ton (the international market prices carbon emissions credits at about $20 a ton), and the new higher-mileage cars mean a reduction of carbon-dioxide emissions of less than what Americans emit every hour.
Obama is desperately urging consumers and investors to have confidence in his understanding of economics. They may, however, remember his characteristic certitude that “cash for clunkers” was “successful beyond anybody’s imagination.”
RIDER ADDENDUM: Will omitted the fact that eight of the top ten new car models purchased under the Cash for Clunkers program were made by foreign corporations — though doubtless sometimes assembled by U.S. workers. As a U.S. taxpayer subsidy for needy Asian automobile companies, Cash for Clunkers has been a smashing success (figuratively and literally).
Top 10 cash-for-clunkers purchases
1. Toyota Corolla
2. Honda Civic
3. Ford Focus
4. Toyota Camry
5. Hyundai Elantra
6. Toyota Prius
7. Nissan Versa
8. Ford Escape FWD
9. Honda Fit
10. Honda CR-V AWD