After just a week of operations, the federal “cash for clunkers” program has used up the entire $1 billion it was allocated.
Does this make the program a rousing success? It depends on what its true aims were. If it was to give a boost to car dealers, who have been hard hit by the economic downturn, it has helped. If the goal, as the bill’s backers touted, was also to reduce oil consumption and greenhouse gas emissions, it is unclear that aim has been met.
Before putting more money into the program, members of Congress must find out if it is working.
Sens. Susan Collins and Dianne Feinstein, a California Democrat, have asked the Department of Transportation to assess the effectiveness of the incentive plan, officially called the Consumer Assistance to Recycle and Save, or CARS, program. Earlier this year, the senators sponsored legislation to create a stricter version of the program that included the purchase of used cars.
Under CARS, drivers can get up to $4,500 for trading in an older, less fuel-efficient vehicle for a new one that gets better gas mileage. The trade-in must be scrapped. The response has been overwhelming.
A Bangor Ford dealer has sold 70 cars and trucks under the program. A GMC dealer has sold about 40. The two dealers estimate they are owed a total of nearly $500,000 by the federal government for the “clunkers” they will take in. The U.S. Department of Transportation says that reimbursements for paperwork already submitted will be forthcoming.
Additional money is needed if the program is to continue, however. The U.S. House voted Friday to allocate $2 billion in stimulus money to the program. The Senate is now considering doing the same.
Part one of the program — stimulating auto sales — appears to have worked phenomenally. Now lawmakers must find out if their second goal — reducing oil consumption — is also being achieved.
Sens. Collins and Feinstein have asked for the transportation department for detailed information on the vehicles purchased and traded in. For example, what is the average age and fuel economy of the vehicles that have been traded in? What about the average fuel efficiency of the cars purchased? What is the difference, on average, between the vehicle traded in and the one purchased by vehicle class?
Clearly, the cash for clunkers program is very popular and Congress should not lose momentum by a long delay in deciding whether and how to continue the program. But it shouldn’t simply pour more money into it without knowing what it is getting in return.
Raising the fuel economy standards, as Sens. Collins and Feinstein call for, will help ensure the legislation’s oil consumption and emissions reduction goals are met. Under the current program, a fuel economy improvement of only 2 miles per gallon is needed to be eligible for a voucher. Including used cars, another proposal from the senators, will ensure that lower-income families can also take advantage of the program.