Out of Control Policy Blog

Taxpayer Cost for Cash for Clunkers: $24,000 Per Car Sold

Alas, we thought it might be too good to be true: The Cash for Clunkers program wasn't the runaway success elected officials claimed it was. Who knew?

Edmunds.com estimates that only 125,000 of the 690,000 cars bought during the program were actually tied to the program. Based on trend analysis by makes and models, the other cars would have been bought anyway. Many of those cars were really justed advanced sales of future cars, a stimulus version of robbing Peter (October) to pay Paul (July). That works out to $24,000 per car for taxpayers according to CNNMoney.com:

"The average rebate was $4,000. But the overwhelming majority of sales would have taken place anyway at some time in the last half of 2009, according to Edmunds.com. That means the government ended up spending about $24,000 each for those 125,000 additional vehicle sales."

What was the response from the White House (the one that promised evidence-based policy decisions)? According to CNNMoney.com:

"It is unfortunate that Edmunds.com has had nothing but negative things to say about a wildly successful program that sold nearly 250,000 cars in its first four days alone," said Bill Adams, spokesman for the Department of Transportation. "There can be no doubt that CARS drummed up more business for car dealers at a time when they needed help the most."

Samuel Staley is Research Fellow

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Comments to "Taxpayer Cost for Cash for Clunkers: $24,000 Per Car Sold":

Berenice V. | October 30, 2009, 3:23am | #

It wasn't that unlicensed lenders were the primary cause of the housing bubble's destruction, but they certainly don't help much. The problem is that now the loopholes in the licensing process are still there, and fraudulent lenders are still able to not only operate, but even to get certified and underwritten by the Federal Housing Administration. The federal government does not have the time or resources to track every lender down. That said, if you are seeking mortgage loan modification be wary of unlicensed lenders. The mortgage industry is in shambles, but is slowly starting to rebuild itself – and in the midst of the reconstruction efforts, a new crop of unlicensed lenders is coming about.

Kim Claudio | October 30, 2009, 3:28pm | #

There where so many restrictions with this clunker deal i didn't even bother to take advantage seems like a big fraud deal to me.

Carthago | October 30, 2009, 7:40pm | #

Heavens forbid that we should buy anything from a merchant that has not received a stamp of approval from the state. Unlicensed you say? Angels and ministers of grace defend us!

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