Clunkers, Part II

I get SO MANY comments on this blog that sometimes it is difficult to find time to acknowledge all of them, even the very good ones. But, due to a general lack of anything else to discuss this evening, I'm going to temporarily yield the floor to one of the great plethora of comments that I have received about my post on the "Cash for Clunkers" program about a week ago:

According to the carbon footprint calculator at terrapass.com (look, I cite figures. Unlike your source article, where the per capita income comes out of nowhere), a 1999 Ford Explorer, a popular car in its heyday that I'm sure is seeing some trading in right now, emits 9.17 tons of CO2 each year; upgrading to a 2009 Ford Focus cuts down to 5.25 tons of CO2 per year. As long as a driver keeps their car for TWO YEARS, they have successfully offset the CO2 output figure you cite.

These numbers assume putting 15,000 miles per year on to the car, which seems an average figure. Terrapass also informs us, passed on the fuel efficiency standards of these models, that the Explorer would use 938 gallons of fuel per year while the new Focus would use 536. That saves 400 gallons of gas per year for the drivers of those new cars, which at an average of $2.55 per gallon (EIA statistic), saves those families $1020 each year. This now means more money for those families could choose to put into other sects of the economy, while also reducing oil consumption by 32,000,000 (32 million) gallons per year, considering that the same article you cited last says 80,000 cars have been upgraded in this program (which sad to say, apparently offsets less than one day of our nation's oil consumption).


Well, I don't think there was any need to get snarky with the "I cite real figures" thing, but I'll let that go for now.

She makes a valid argument in favor of why driving a Ford Focus is better for the environment than driving a Ford Explorer, but I don't think that comes as a real shock to anyone. The problem is, with the way the program is structured, the people who are trading in SUVs with really bad gas mileage, are not generally driving away in Ford Focuses (Foci??).

If you trade in a car that gets less than 18 MPGs (which is the only way to qualify for the $4,500 discount), you only need to purchase a new vehicle that gets 22 MPG. In other words, they set the bar too low, particularly when you consider that the government requires car manufacturers maintain an average of 25 MPG for all new cars they make. So if you drop off your Hummer H2, you can drive away in something like a Ford F-150 (a mid-sized pickup), which qualifies. Does that make the planet a whole lot better off? Maybe a little. But now you've got to choose between helping the environment a tiny little bit and all the negative outcomes of the program.

My dear reader continues to valiantly defend the "small successes are worth it" approach:

I think this program has brought into clear light the difference fuel efficiency, and other small changes, can make for both the economy and the environment, and for that reason is admirable. To call it a failure is unbelievably harsh, and while I admit there are flaws in the plan, I have not been convinced by a single article or report that this program is anything so cut and dry as either a failure or an outright success.

Ok, so maybe it's not an outright failure, but it's pretty close. Even members of the administration realize this is failing. From today's Washington Post:

“What we ended up with,” said one senior Obama administration official, who would not speak on the record because he was being critical of his own administration’s environmental bona fides, “is a program in which you trade in old clunkers for new clunkers.” Less discussed is the second critique of the program: It rewards drivers who chose to buy gas guzzlers a few years back, but not those who spent more to buy fuel-sippers.

I think that second point has been seriously understated. It's like rewarding a shoplifter with a $100 free shopping spree and hoping they stop stealing from you after that.

Now allow me to add another critique. I was speaking to a car dealer here in Rochester the other day (look, I use real sources too), and he brought up this point, which I hadn't though of before:

Assume that you are an individual living on low income, or even fixed income. There are certainly enough people like that in this country to consider them an important part of population. Now, you, as one of those people, would really love to get a new car, but even with the $4,500 rebate, you just can't scrape together enough money to afford a brand new car. So you will go out and try to find a reliable model with more than 100,000 miles on it that costs somewhere under two grand. According to this dealer I was speaking to, a pretty significant portion of the used car business is in these "heavily used but pretty cheap" cars.

Well, thanks to "Cash for Clunkers", much of the supply in that sector of the market has been destroyed. People that would normally trade their cars in years from now and buy a new one (allowing that old car to be sold off to someone with low or fixed income at a low price) are trading their cars in right now. The government mandates that all cars traded in through the program must be crushed, so they can't be resold. This means today's "clunkers" will not get the chance to be tomorrow's cheap bargains.

This will at least for a few years disproportionately hurt the poorest members of society, the ones who can't take advantage of the "Clunkers" program right now because it only covers new cars and won't be able to buy a old, cheap, crappy car in the future because there will be so few of them left.

So now the liberals have to choose: the environment or the poor people?

What you're left with a program that does not create new demand (it just shifts future demand forward), destroys the future of an important segment of the used car market, and rewards the people who have been causing the "problem" in the first place. All in the name of a tiny reduction in gasoline consumption, slightly better emission statistics, and a little bump in consumer confidence.

Like Third Eye Blind sings in their newest single: "half-measures are all half-assed" (funny, they wrote that as a critique of Bush....but it works for government in general)