A Modest Proposal for Eco-Friendly Stimulus: "Cash for Clunkers"

[DeepModem Mom]

NYT: Economic View
A Modest Proposal: Eco-Friendly Stimulus
By ALAN S. BLINDER
Published: July 27, 2008


(David G. Klein)

Economists and members of Congress are now on the prowl for new ways to stimulate spending in our dreary economy. Here’s my humble suggestion: “Cash for Clunkers,” the best stimulus idea you’ve never heard of. Cash for Clunkers is a generic name for a variety of programs under which the government buys up some of the oldest, most polluting vehicles and scraps them. If done successfully, it holds the promise of performing a remarkable public policy trifecta — stimulating the economy, improving the environment and reducing income inequality all at the same time. Here’s how.

A CLEANER ENVIRONMENT The oldest cars, especially those in poor condition, pollute far more per mile driven than newer cars with better emission controls. A California study estimated that cars 13 years old and older accounted for 25 percent of the miles driven but 75 percent of all pollution from cars. So we can reduce pollution by pulling some of these wrecks off the road. Several pilot programs have found that doing so is a cost-effective way to reduce emissions.

MORE EQUAL INCOME DISTRIBUTION It won’t surprise you to learn that the well-to-do own relatively few clunkers. Most are owned, instead, by low-income people. So if the government bought some of these vehicles at above-market prices, it would transfer a little purchasing power to the poor.

AN EFFECTIVE ECONOMIC STIMULUS With almost all the income tax rebates paid out, and the economy weakening, Cash for Clunkers would be a timely stimulus in 2009. As was made clear during the Congressional debate last winter, prompt spending is critical to an effective stimulus program. And the quickest, surest way to get more consumer spending is to put more cash into the hands of people who live hand-to-mouth....

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(People) would be free to spend this money as they see fit, whether on a new car or truck or some other form of transportation — or anything else. To ensure that the program really pulls clunkers off the roads, only vehicles that had been registered and driven for, say, the past year would be eligible....

Local variants are either now in operation or have been tested in California, Colorado, Delaware, Illinois, Texas, Virginia and several Canadian provinces....

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Oh, and I left out a fourth possible goal. By pulling millions of old cars off the road, Cash for Clunkers would stimulate the demand for new cars as people trade up....

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Write your congressman.

(Alan S. Blinder is a professor of economics and public affairs at Princeton and former vice chairman of the Federal Reserve. He has advised many Democratic politicians.)

http://www.nytimes.com/2008/07/27/business/27view.html

[Demeter]

1. Only One Problem: THe Clunkers Are on the Road Because They ARE More Efficient

than the F-150 or the SUV or the Crossovers. My 1994 Saturn is doing 20 mpg for my business, which involves door to door deliveries in the city at a crawl.

And the US couldn't afford to get all those pricy Man Trucks off the road...



Edited to Add: Besides, they are paid for!

[Warpy]

2. Not only that, but the stimulus would only provide

money enough for a slightly new clunker, possibly a discarded SUV, monster truck or momvan, a less efficient vehicle dumped on a saturated market and sold at a loss to people desperate for something that runs.

I spent most of my life being a bottom feeder when it came to cars, although I was able to find 4 cylinder rust buckets instead of getting land barges that were dumped during the last double digit gas inflation. Most people like me were desperate enough when they went looking for a new tuna wagon that they weren't nearly as picky. Also, I learned the mysterious ways of Bondo, and that widened my choice a bit.

The only thing that will get gas hogs off the road is time, I'm afraid, time for poor people to buy them, use them hard, and drive them into the ground. The good thing about most poor folks is that they can't afford gas plus maintenance and the gas hogs will die premature deaths in their hands.

[Demeter]

4. I Don't Think Those SUV's Will Ever Get To the Poor

Unless they are sold as housing.

[Warpy]

6. That's one reason the working poor will find them so attractive

especially the momvans. They're already living in dangerous marginal housing. Moving into a momvan in the summer will seem like an attractive alternative.

Remember, the working poor have to focus on initial cost. They will buy the cheapest things on the lot. As more and more people look for ways to dump gas hogs, those will be the cheapest things on the lot.

[kestrel91316]

3. My 20 yr old Honda Accord that passed its latest smog check with

flying colors only gets driven about 250 miles a month these days. It doesn't need replacing as much as the Hummer at the place down the street from my office, where I would lay heavy odds the owner drives (conservatively) 3-4 times as much as me and pollutes correspondingly more.

[Demeter]

5. Blinder Is a Serial Idiot, By the Way

Long history of inanity.

[independentpiney]

7. What an out of touch, latte liberal elitist idea

Lower income people like myself are driving old clunkers because we can't afford a newer vehicle, and in many cases don't have viable public transportation available.Nor the credit histories or income to get a new car loan with reasonable terms. So unless you're going to pay me at least 20,000 for my 1994 Dodge Ram 1500 (It was my work truck before I became disabled), no deal jedi.

[williesgirl]

8. My 94 Honda Accord w/160,000 miles still passes all emissions tests and gets better mileage

than my 2000 Ford Taurus, which is also around 155,000 miles. We can't afford to replace either of them.

Suggest you try getting the SUV's, minivans and trucks off the road before assuming older cars are all polluting the environmnet. My guess is every state has emissions testing to renew your registration.