While measurement of the success of the government’s recent “Cash for Clunkers” program varies with each individual, there is no denying the American public’s interest in the program. With dealerships displaying promotional banners like these on their lots and automakers, like Chrysler, doubling the government’s offer of $3,500 or $4,500 discounts, giving consumers up to $9,000 off some new cars, Americans have taken full advantage of this opportunity.

The Car Allowance Rebate System (CARS) program (a.k.a. Cash for Clunkers) has been so popular that the initial $1 billion allocated to the program from the recent federal stimulus package was exhausted within a week, and the House of Representatives voted to rush an additional $2 billion into the program on July 31st. With Detroit’s automakers accounting for 47 percent of the first 80,000 “Cash for Clunkers” sales, the program has done its job of stimulating American auto sales. The transactions are generating a 61 percent increase in vehicle fuel economy. The average fuel economy of new vehicles purchased under the CARS program is 25.4 miles per gallon, and the average fuel economy of trade-ins is 15.8 mpg, for an average increase in fuel economy of 9.6 mpg (via National Highway Traffic Safety Administration). While many economists have criticized the net effect of the CARS program, what other viable economic stimulus options do we have left?

Posted on August 4th, 2009 by PoliticalSchwagCollector
Filed under: Uncategorized