Wikinvest Wire

How much did Cash for Clunkers cost?

Thursday, October 29, 2009

The White House is in sharp disagreement with a new report by indicating that the Cash for Clunkers program cost some $24,000 per vehicle when the program's total cost is spread out over the number of "incremental" cars sold.

As was the case for the homebuyer tax credit, said to cost $42,000 for each home sale the program spurred, there seems to be a fundamental disagreement over how many sales were made that would not otherwise have been made.

Edmunds claims to have had a crack team of PhDs and statisticians working on this problem, crunching the numbers, the end result obviously not to the liking of staffers at the White House. Based on the graphic in the last post, it sure looks like there was some sort of an outside influence involved.

According to this story in the Detroit Free Press, the motives of Edmunds are political.

But Mike Jackson, CEO of AutoNation, also defended the program. Of Edmunds, he said: “Simply put, they’ve misrepresented the facts, and the White House is completely justified in calling them out on it. It would appear that their political views have tainted their usual rigorous approach to research."
I've found the website to be quite helpful over the years. In fact, it's pretty much indispensable if you're trying to decide between many different makes and models before making an auto purchase.

But, they've got a political agenda too?

The news outlet that may not be a real news organization filed this report, which, aside from the typos in the first paragraph, looked pretty professional to me.
The Obama administration (White House and Transportation Depatment) did some heavyweight policy sparring with today over criticism that Cash for Clunkers might have cost taxpayers $24,00o per vehicle sold. came to that figure by estimating that only 125,000 of the Cash for Clunker program's 691,000 documented vehicles sales were a direct result of cash incentives.

The White House fired back as did DOT, arguing in pretty strong language, alleging that Edmunds' was calculating mystery auto sales on Mars and missing real show-room deals in the grand old USofA (okay, it didn't say the USofA part).

I asked top White House economist Jared Bernstein about the flap late Thursday. Here's his answer.

"It may well be the case that some of the sales in Cash for Clunkers were sales that would have occurred anyway, but wouldn't have occurred when they did. In other words, I'm sure that some of those sales were pulled forward - maybe a quarter, maybe 6 months, maybe a year. And that's okay, especially when you look at today's GDP report where we are posting positive growth and where consumer durables including autos is a big contributor, we really need that growth now. Pulling sales forward is actually helpful."
While not a regular reader of the White House blog, that particular item linked to above (and again here) had a doozy of a headline:

Busy Covering Car Sales on Mars,
Gets It Wrong (Again) on Cash for Clunkers

Apparently there's some history between these two...

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Mike Bate said...

There where so many restrictions with this clunker deal i didn't even bother to take advantage seems like a big fraud deal to me.

Cars4Charities said...

Besides costing taxpayers a lot of money, cash for clunkers cost car repair shops and car donation a fortune.

Anonymous said...

What it really did was give hundred of thousands of people a tax credit of $3,000 to $4,500.

Since the government never has to pay off principle of Treasuries and the interest rate is at 1%. This is a good deal.

Banks can get bailed out but buyers of higher mileage cars can't get a break?

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