On Clunkers debate, one point we can all agree on

A big "Thank you" to the White House blog team for a witty and perceptive account of Cash for Clunkers' real contribution to our economic recovery.

If you haven't read about the brush-up prompting that White House response, it began with a report from Edmunds.com that minimized the impact of Cash for Clunkers.

You don't have to look too far beyond Edmunds to find loads of support for a positive analysis of this successful program:

• Ford Motor Co. estimates 30-40% of Cash for Clunkers sales were truly incremental--an increase of 210,000 to 280,000 vehicles, or twice what Edmunds asserts).
• Moody's Investors Service estimated 60% of sales were incremental or about 420,000 extra vehicles.
• Mike Jackson, CEO of AutoNation, told the Detroit News': "Simply put, they [Edmunds] have misrepresented the facts, and the White House is completely justified in calling them out on it. Edmunds' political views have tainted their usual rigorous approach to research. We believe that the incremental sales are over 500,000 new vehicles."

But, let's also not forget about the larger goal of the Cash for Clunkers program: to jump-start this economy. By that measure, the 1.7% of our 3.5% growth this past quarter attributable to the automobile industry reveals that this program has done exactly what was intended.

Others agree:

• George Pipas, sales analyst for Ford: "They [Edmunds] missed the point. The whole purpose of the program was to provide some kind of catalyst to kick-start the economy, and by all accounts the extra production that was added this year was a boost to the economy."
• Jared Bernstein, White House economist: "Some sales in Cash for Clunkers were sales that would have occurred later than when they did. That's okay, especially when you look at today's GDP report where we are posting positive growth; we really need that growth now. Pulling sales forward is actually helpful."

It's no secret that I believe Cash for Clunkers was wildly successful. But, I will say that I like the closing suggestion of the response I read on Edmunds.com, and I think it's well worth sharing:

"Officials should take heart from the core message of the analysis: the fundamentals of the auto marketplace are improving faster than the current sales numbers suggest."

That's something I hope we can all agree on, and celebrate.

Comments

[Fred Fry]

If the goal was to jumpstart the economy, then why were the rules for which cars that were covered so restrictive that my 1994 BMW with nearly 200,000 miles on it excluded? I am in the market for a new car but was told that my existing car was too 'green' to warrant crushing.

The original goal of 'Cash for Clunkers' was to get gas guzzlers off the road. What ever happened to that goal. What will happen to the 'jumpstart the economy' goal next quarter when car sale stats fall off a cliff?

The plan was wildly successful because you guys were giving away money.

[Michael E. Bailey]

Cash for Clunkers has been a great program here in Orange County too. Car show rooms were full and people were buying. Mission Viejo's auto dealerships and the automall did so well and the city got so much sales tax money that they didn't have to layoff staff or eliminate programs, and are still maintaining one of the healthiest reserves and one of the highest bond ratings of any city or county in California. So it was great. But there will always be a few that will hate it from now on because it was an Obama Administration program, or because it was a Democratic program or just because the Republicans didn't think of it. But the facts show it was a great program and a needed one not only to get the economy moving again but also to get greater energy independence and an important reduction in greenhouse gases. Best wishes, Michael E. Bailey.

[William Bryant]

The true effect of this government program will be measured years from now. I for one think it was a good idea. I would like to know for the record how this idea originated. My reason for inquiring is that over a year ago I submitted an idea to to the Google 10 to 100 Aniversary Idea Program. My idea submission was titled "Kash for Clunkers". The main focus was to get gas guzzlers off the streets and in the crusher to help the environment. I have continiously contacted Google to see if their program relaesed any of the 150,000 ideas to other agencies for implementation. To date, I have never received a response. I find it very interesting that the government program and my idea submission were executed in a manner so similar that it was alost word for word. It would be nice if Google would at least publish the idea I submitted and the date it was placed in their control.

[Shawn A.]

I find this discussion over the success of the CARS program very interesting. However, it seems to me that the actual effect of this program cannot be initially known.

Secretary LaHood is correct in touting the fact that the CARS program was extremely successful in busting the GDP and in successfully eliminated gas guzzlers from the road and replacing them with more fuel efficient cars. But as Secretary LaHood says, he CARS larger goal was to help jump-start the economy.

However, I believe the CARS program can only be deemed a true success unless the GDP growth of the 3rd quarter is sustainable.

With programs such as the CARS program, and also the New Homeowners Tax Credit, and increase in sales should be expected. However, I think a surprise of the CARS program was the amount of sales that happened. Selling nearly 700,000 cars during the program should be seen as a great success. But now we must wait and see if this success came at the price of decreased sales in another sector.

If the growth in the 3rd quarter is sustainable, then I feel we can call the CARS program a success. However, if the 3rd quarter growth is not sustainable, and growth in the 4th quarter falls or is negative, then the CARS program is not necessarily a failure; it just did not jump-start the entire economy as was hoped.

I hope that we start seeing continual growth in the economy in order to alleviate the pressure of a troubled economy from the citizens. If this happens, I believe we can consider the CARS program a success, and maybe use it as a template on how to jump-start the economy in the future if/when we experience another recession like the one just have.

[Philip in Silver Spring]

While the CARS or "Cash for Clunkers" program may always be debated in terms of success and failure, one thing is true: the department's implementation of this program raises some questions about its commitment to over-arching, national transportation policy goals.

Earlier this year DOT Secretary Ray LaHood, HUD Secretary Shaun Donovan and EPA Administrator Lisa Jackson announced an "Interagency Partnership for Sustainable Communities." This partnership is said to “help improve access to affordable housing, more transportation options, and lower transportation costs while protecting the environment in communities nationwide.” On the surface, this sounds like a fantastic opportunity to combine the resources of multiple federal agencies to reach a common goal.

However, after taking a closer look, it appears CARS and the Partnership for Sustainable Communities contradict one another.

On one hand, DOT is subsidizing hundreds of thousands of extra vehicles on the roads. Ford Motor Co. estimated a number of 250,000 vehicles and Moody’s estimated 420,000 vehicles. On the other hand, the first “livability principle” under this new partnership is to “develop safe, reliable and economical transportation choices to decrease household transportation costs, reduce our nation’s dependence on foreign oil, improve air quality, reduce greenhouse gas emissions and promote public health” (emphasis added). With the introduction of thousands more carbon-emitting, foreign-oil using vehicles, it seems CARS would actually increase our dependence on foreign oil, worsen air quality, increase greenhouse gas emissions, and overall directly combat its own sustainability initiative.

My question: Is it possible for DOT to walk the policy tightrope and still make a real difference?

It appears that DOT is making a good-faith effort to address our nation’s most pressing transportation and energy issues, but the policies themselves result in contradicting “accomplishments.”

[Rob]

Now that this policy has had a number of months in force, what have been the results? Has it encouraged growth within the US motor economy, or has it stimulated growth in the Japanese motor economy as US citizens seek to buy Nissan and Toyota instead of Ford?