Wonder what you would find if you frisked President Obama’s Cash-for-Clunkers incentive program?
Answer: It was an absolute failure.
Seriously, are we really shocked by this news? If you are a conservative individual, nope. If you are a lost liberal ideologue, you are probably scratching your heading and wondering: “Hmm… What went wrong?”
The Obama administration and the Democratic leadership in Congress offered the Cash for Clunkers program as a Keynesian stimulus for auto sales, arguing that they could stimulate the industry as a whole through the expense of several billion dollars in public funds. Did it work? Coyote Blog parsed the retail sales data from the Census Bureau and discovered that it had no impact in the overall growth rate of sales after a collapse in 2008.
The data show that the government stimulus did increase sales — but that the following month, sales dropped in proportion to the spike. The three-week incentive program simply moved sales from the future into the present, and did nothing to increase organic demand even in a relatively short run. Sales had already begun to rebound in the spring, even with the Cash for Clunkers proposal moving through Congress.
In the end, the federal government spent billions of taxpayer dollars – that we don’t have – on incentivizing people who would have bought brand new cars anyway. What else did we gain from President Obama’s Cash-for-Clunkers program? More debt stacked on top of our already massive budget deficit. Yippy!
One word: FAIL.