Cash for Clunkers or The Worst Way To Spend 3 Billion Dollars

The Federal governments C.A.R.S program, popularly known as Cash for Clunkers was devised as a way to a) get people into to dealerships to buy new cars and b) get old poor fuel economy cars off the streets. What this really means is that the Cash for Clunkers program was a way to put money in the pockets of the auto dealers to shut them up for not bailing out GM and Chrysler and appease the ever growing Green movement by appearing to decrease our gas consumption and thereby indirectly reduce our greenhouse gas emissions.

Well they could not have gotten it more WRONG!

Or maybe not, lets look at a couple of points here and you decide who benefitted.

Cash for Clunkers = Economic Stimulus
One of the purported benefits of the CARS program was that it would incentivize the American public to go out and spend money on a new car. Never mind that they might not have the spare cash or the flexibility in their budget to afford a new car. So the first round of Cash, the initial $1,000,000,000 (1 billion dollars ) was allocated by Congress, against the advise of many members on both sides of the aisle, and the media started the frenzy by giving the dealers essentially free advertising in the form of news coverage. This money ran out after the first 28 days or so, so the Senate approved another $2,000,000,000.

The average payout was $4,000, so that means the roughly 750,000 cars and trucks were sold. The average dealer profit on cars that qualified was about $900, so the auto dealers grossed somewhere around $675,000,000. Not bad, however the vast majority of cars that were sold were IMPORTS, not American cars. Some estimates put it as high as 75% of the cars sold were Honda, Hyundais and Toyotas, and not the ones that are built here.

That means that something like $506,000,000 of the profit (stimulus) is leaving our country. This also and more importantly means that the American Taxpayers are giving $2,200,000,000 to foreign auto manufactures so they can have a really nice third quarter.

Brilliant! Thanks Rep. Betty Sutton, D-Ohio, and Sen. Debbie Stabenow, D-Mich. as well as Senate Majority Leader Harry Reid, D-NV. Good looking out.

Reduced Oil Consumption and Greenhouse Gas Emissions
Based on the estimated sales of 750,000 cars and trucks and assuming that they all replaced vehicles with a low MPG of 13 with new cars that get an slightly unrealistic 20, here's the big gas savings:

Using an average of 15,000 miles per year, the "clunker" uses 1,153 gallons of gas and the "green machine" uses 750 gallons for a savings of 403 gallons of gas per year.

Now if each and every car bought under Cash for Clunkers saves 403 gallons per year that means our annual gas saving for the country, based on 750,000 cars sold is 302,250,000 gallons.

Sounds like a lot, but our average DAILY consumption was 378,000,000 gallons for 2008.

That means that we have reduced our annual gas consumption by a whopping 0.27%. Big F-ing Deal. We didn't even reduce the consumption by a full days worth of driving. It not enough to even slightly irritate the Saudi princes.

So you tell me, was Cash for Clunkers the big success they are telling us it was?

With all due respect,
The Chief