Who Really Benefitted from the Cash for Clunkers Program?
With the cash for clunkers program scheduled to end tomorrow night, the question should be asked who really benefited? Sure the folks who bought cars and got rebates benefited from a reduced price on their car and the auto dealers certainly liked the program but with billions of dollars spent, what did the country as a whole get?
The issue is that this was a very short term spike in car sales which isn’t likely to produce any significant long term benefits to the economy. We’ve given one segment of our economy a short term boost but without any real economic recovery to support continued sales, it’s just a shot in the arm that may make August economic data look better than it really is (if looked at a sustainable basis) and keep the unemployment rate from going any higher. It does not do anything to address any of the real underlying issues in the automotive industry.
Finally there are real concerns that all the cash for clunkers program really did was divert monies that would have been spent on other retail purchases have now be diverted to making a car payment that wasn’t in the family budget before this program Retail sales in July was weak and the back to school spending looks to be down this year. For those struggling in non automotive related retail sales, the cash for clunkers program was not any bargin.
Moreover, many charities that take on used cars are now reporting a significant drop off of donations since the used cars turned in under the cash for clunkers program must be destroyed. That’s frustrating to them and hurts those with limited means.