Is 'Cash for Clunkers' Gearing Up for a Comeback?

U.S. Secretary of Transportation Ray LaHood has described the federal car trade-in program known as "Cash for Clunkers" as "the most wildly successful program ever." Speaking at the 2010 North American International Auto Show in Detroit last week, LaHood said"you see no criticism of Cash for Clunkers in America." I'm no big fan of hyperbole and it does seem a stretch to rank Cash For Clunkers at the top of every other program in history. But that's the same language a transportation department spokesman used to describe Cash For Clunkers in a recent phone conversation.

Officially launched on July 1, 2009, the $3 billion program provided federal incentives to motorists to trade in their gas-guzzlers for more fuel-efficient cars. It lasted only 30 days.

The Secretary of Transportation's recent remarks leads one to wonder whether Cash For Clunkers may be coming back for another round.

But does the nation really want it? It's normal and expected for politicians to minimize the concerns of their critics, but LaHood seems to want to deny that the critics of Cash for Clunkers even exist. A 2009 Rasmussen Reports survey found that 54% of Americans oppose Cash for Clunkers, compared with just 35% who support it.

It's not just the "peasants with pitchforks" tea party crowd that questions the merit of the program. Many academics have judged the program as something other than "the most wildly successful program ever." Economists have complained the program merely shifted sales from the future to the present, and hurt the lower- and middle-class by trashing perfectly usable cars. estimated that the program ended up costing taxpayers about $24,000 for every car sale that it stimulated. And other economists have raised doubts about the supposed environmental benefits of the program: People with new, fuel-efficient cars drive more (10 miles at 20 MPG is just as bad for the environment as 5 miles 10 MPG). What's more, a considerable amount of carbon is emitted to make all those new fuel-efficient cars.

It's been said that the Detroit auto industry will only be able to turn itself around if it becomes less bureaucratic more realistic, and pays attention to criticism from the marketplace. By the sound of LaHood's recent remarks, he may not be setting the best example.
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