Shocking Economic News: Cash for Clunkers Was a Complete Failure

[Weatherman2020]

Unintended consequences of a government program ends in negative effects to the economy.
My shocked face is in the shop, the Dems have really given it a thrashing this past 10 years.
And like always, they will never apologize to the poor they hurt.


Three economists (from MIT and Tex A&M) have crunched the numbers and discovered that Obama’s Cash-for-Clunkers scheme back in 2009 was a failure even by Keynesian standards.

The abstract of the study tells you everything you need to know.

The 2009 Cash for Clunkers program aimed to stimulate consumer spending in the new automobile industry, which was experiencing disproportionate reductions in demand and employment during the Great Recession. Exploiting program eligibility criteria in a regression discontinuity design, we show nearly 60 percent of the subsidies went to households who would have purchased during the two-month program anyway; the rest accelerated sales by no more than eight months. Moreover, the program’s fuel efficiency restrictions shifted purchases toward vehicles that cost on average $5,000 less. On net, Cash for Clunkers significantly reduced total new vehicle spending over the ten month period.

This is remarkable. At the time, the most obvious criticism of the scheme was that it would simply alter the timing of purchases.

And scholars the following year confirmed that the program didn’t have any long-run impact.

But now we find out that there was impact, but it was negative. Here’s the most relevant

 

[gipper]

Like all things Keynesian, failure is common.

This study came out in 2014 clearly proving Obama's Cash for Clunkers was a total and complete failure. I wonder why not ONE DNC media outlet reported it...

Now...imagine what the DNC media would do if it were Trump's Cash for Clunkers. D voters get duped again.

Here is the study....
http://www.nber.org/papers/w20349.pdf

 

[Norman]

Wait, someone actually thought that trashing vehicles has any other effects than destroying the environment hard left style?

I can see who wrote the policy.

(Antifa riot at Hamburg)

 

[Muhammed]

Cash for Clunkers was a huge attack on the middle class.

It was a wanton destruction of material wealth. An attack on the USA from within.



During the Obama economic depression "Cash for clunkers" put inflationary pressure on the used vehicle market, thus making it more difficult for Americans to earn a living.

 

[Supposn]

Unintended consequences of a government program ends in negative effects to the economy. ...
... Three economists (from MIT and Tex A&M) have crunched the numbers and discovered that Obama’s Cash-for-Clunkers scheme back in 2009 was a failure even by Keynesian standards.

The abstract of the study tells you everything you need to know.

The 2009 Cash for Clunkers program aimed to stimulate consumer spending in the new automobile industry, which was experiencing disproportionate reductions in demand and employment during the Great Recession. Exploiting program eligibility criteria in a regression discontinuity design, we show nearly 60 percent of the subsidies went to households who would have purchased during the two-month program anyway; the rest accelerated sales by no more than eight months. Moreover, the program’s fuel efficiency restrictions shifted purchases toward vehicles that cost on average $5,000 less. On net, Cash for Clunkers significantly reduced total new vehicle spending over the ten month period.

This is remarkable. At the time, the most obvious criticism of the scheme was that it would simply alter the timing of purchases.

And scholars the following year confirmed that the program didn’t have any long-run impact.

But now we find out that there was impact, but it was negative. Here’s the most relevant

Weatherman2020, you and I may, (and probably do) question if the 2009 Cash for Clunkers program justified its cost to the federal budget; we do agree accomplish its primary purpose, (i.e. it induced increased sales of new vehicles while it was active and an immediate economic boost was being sought.

It was economically more consequential that numbers of new car inventory were reduced, rather than which priced models’ inventories were reduced. If purchasers of less expensive models had any remaining discretionary income, they could then elect to additionally purchase other than vehicle products. Those that had no remaining discretionary income could not have purchased a more expensive vehicle.

Accelerating the proportions of more fuel-efficient vehicles in the USA is of economic benefit to our nation.

You’ve not provided a link to the abstract or the study itself that was written by “Three economists (“from MIT and Tex A&M”). I will (for now) assume they’re creditable economists.

How did they conclude 60% of the federal subsidies went to purchaser that would have purchased NEW vehicles during the programs activity, even if there had not been a purchase subsidy? I suspect the conclusion was derived from polling the opinions of those new car purchasers.

The three wise men from MIT and Tex A&M also concluded new cars sales were an average of $5,000 less per vehicle and that was due to the price subsidy being limited to only fuel-efficient vehicles?

I speculate that many of those clunker trade-ins were made by purchasers previously having no intentions of buying a new car then or within their then near future. Many of those purchasers may have rarely or ever purchased new cars; but it was required they be financially able to avail themselves of this price subsidy.

Three factors then coincided. (1) USA’s common peculiarity that’s uncommon elsewhere is our monthly payments are usually less for the purchase of a new car rather than for a late similar model used car. (2) This unusual Cash-for-Clunkers price subsidy. (3) The amount of the purchase subsidy was fixed; making it proportionally more attractive to the purchaser of a lesser priced vehicle.

Many of those responding to pollsters’ questions regarding the motivations of their purchase were lying in order to rationalize their purchase to themselves or to impress the pollsters. Of course, the respondents consider themselves to be logical independent thinkers NEVER influenced or manipulated by any politicians or government policies.

We lie to each other, we lie to ourselves, and we certainly lie to poll takers. Depending upon who’s being questioned, who’s asking, and how the questions are presented, what we reasonably can derive from those answers may significantly differ. President Thomas E. Dewey understood that.

Respectfully, Supposn

 

[edthecynic]

Shocking Economic News: Cash for Clunkers Was a Complete Failure

Fake News from 2014

 

[jon_berzerk]

total failure

ended costing those who could least afford it

much more to fix their cars


while the rich made off like bandits

--LOL

lefties are ok with that sort of shit

as long as a leftist promoted it

--LOL

 

[MarkClaude]

OP is a complete lie.

 

[Supposn]

Cash for Clunkers was a huge attack on the middle class.

It was a wanton destruction of material wealth. An attack on the USA from within.

During the Obama economic depression "Cash for clunkers" put inflationary pressure on the used vehicle market, thus making it more difficult for Americans to earn a living.

Muhammed, we oppose the Cash-for-Clunkers program due to its cost to our federal budget. It did accomplish its primary purpose, (i.e. it induced increased sales of new vehicles while it was active and it was an immediate economic boost in a time of need.

I believe we have good reason to assume with no analysis effort that our government could have better employed our tax revenues for our economic benefit.
Other than that, it did accomplish everything that could reasonably be expected from such a program.

[There was no benefit to a purchaser that should induce them to participate if the market value of their trade-in was less than the government subsidy].

Since trade-ins were required to be in drivable condition and have been registered and insured continuously for the full preceding year when being traded in, we can reasonably assume that some of those trade-ins would have been of economic use to someone if the program did not require those vehicles to be destroyed to the extent that, effectively as vehicles, or as their engine components, they could not economically be restored to perform their intended function. It was not economically feasible even if cost free do-it-yourself labor was available.

Cash-for-Clunkers required these afore mentioned destructions of values because it would have otherwise been net costlier and less feasible to enforce a program that should not have been enacted.

The program could possibly have only increased prices for clunkers and their used engine parts. It had almost no affect upon other than used clunker engine parts. Thus, it did not put any significant inflationary pressure upon other than clunker vehicles and it could only have had a deflationary effect, (i.e. reduced prices) for used clunker parts other than engine parts. It did not make it more difficult for Americans to earn a living.

Respectfully, Supposn

 

[Muhammed]

More wanton destruction of American wealth.

Then idiot Democratic party supporters wonder why they got their asses whooped in Ohio.

Fuck you.

 

[Muhammed]

Cash for Clunkers was a huge attack on the middle class.

It was a wanton destruction of material wealth. An attack on the USA from within.

During the Obama economic depression "Cash for clunkers" put inflationary pressure on the used vehicle market, thus making it more difficult for Americans to earn a living.

Muhammed, we oppose the Cash-for-Clunkers program due to its cost to our federal budget. It did accomplish its primary purpose, (i.e. it induced increased sales of new vehicles while it was active and it was an immediate economic boost in a time of need.

I believe we have good reason to assume with no analysis effort that our government could have better employed our tax revenues for our economic benefit.
Other than that, it did accomplish everything that could reasonably be expected from such a program.

[There was no benefit to a purchaser that should induce them to participate if the market value of their trade-in was less than the government subsidy].

Since trade-ins were required to be in drivable condition and have been registered and insured continuously for the full preceding year when being traded in, we can reasonably assume that some of those trade-ins would have been of economic use to someone if the program did not require those vehicles to be destroyed to the extent that, effectively as vehicles, or as their engine components, they could not economically be restored to perform their intended function. It was not economically feasible even if cost free do-it-yourself labor was available.

Cash-for-Clunkers required these afore mentioned destructions of values because it would have otherwise been net costlier and less feasible to enforce a program that should not have been enacted.

The program could possibly have only increased prices for clunkers and their used engine parts. It had almost no affect upon other than used clunker engine parts. Thus, it did not put any significant inflationary pressure upon other than clunker vehicles and it could only have had a deflationary effect, (i.e. reduced prices) for used clunker parts other than engine parts. It did not make it more difficult for Americans to earn a living.

Respectfully, Supposn

Bullshit. Every single truck that was destroyed could have helped a man earn a living.

You Dem apologists go to very great lengths to justify this bullshit.

 

[fncceo]

Nooooo!

 

[gipper]

Cash for Clunkers was a huge attack on the middle class.

It was a wanton destruction of material wealth. An attack on the USA from within.

During the Obama economic depression "Cash for clunkers" put inflationary pressure on the used vehicle market, thus making it more difficult for Americans to earn a living.

Muhammed, we oppose the Cash-for-Clunkers program due to its cost to our federal budget. It did accomplish its primary purpose, (i.e. it induced increased sales of new vehicles while it was active and it was an immediate economic boost in a time of need.

I believe we have good reason to assume with no analysis effort that our government could have better employed our tax revenues for our economic benefit.
Other than that, it did accomplish everything that could reasonably be expected from such a program.

[There was no benefit to a purchaser that should induce them to participate if the market value of their trade-in was less than the government subsidy].

Since trade-ins were required to be in drivable condition and have been registered and insured continuously for the full preceding year when being traded in, we can reasonably assume that some of those trade-ins would have been of economic use to someone if the program did not require those vehicles to be destroyed to the extent that, effectively as vehicles, or as their engine components, they could not economically be restored to perform their intended function. It was not economically feasible even if cost free do-it-yourself labor was available.

Cash-for-Clunkers required these afore mentioned destructions of values because it would have otherwise been net costlier and less feasible to enforce a program that should not have been enacted.

The program could possibly have only increased prices for clunkers and their used engine parts. It had almost no affect upon other than used clunker engine parts. Thus, it did not put any significant inflationary pressure upon other than clunker vehicles and it could only have had a deflationary effect, (i.e. reduced prices) for used clunker parts other than engine parts. It did not make it more difficult for Americans to earn a living.

Respectfully, Supposn

It is clear that most government programs are failures. Obama's Cash for Clunkers is but one.

The sad thing is most Americans are not informed of these costly and outrageous failures, because the MSM is completely co-opted by the government. There are exceptions to this...if it were Trump's Cash for Clunkers, I am guessing the MSM would inform the American people of it's failure.

 

[MarkClaude]

Bullshit. Every single truck that was destroyed could have helped a man earn a living. You Dem apologists go to very great lengths to justify this bullshit.

The program sold new cars, as it was supposed to do. Do you vent every Sunday morning against a world in which you feel you have no meaning.

 

[Bob Blaylock]

Unintended consequences of a government program ends in negative effects to the economy.
My shocked face is in the shop, the Dems have really given it a thrashing this past 10 years.
And like always, they will never apologize to the poor they hurt.


Three economists (from MIT and Tex A&M) have crunched the numbers and discovered that Obama’s Cash-for-Clunkers scheme back in 2009 was a failure even by Keynesian standards.

The abstract of the study tells you everything you need to know.

The 2009 Cash for Clunkers program aimed to stimulate consumer spending in the new automobile industry, which was experiencing disproportionate reductions in demand and employment during the Great Recession. Exploiting program eligibility criteria in a regression discontinuity design, we show nearly 60 percent of the subsidies went to households who would have purchased during the two-month program anyway; the rest accelerated sales by no more than eight months. Moreover, the program’s fuel efficiency restrictions shifted purchases toward vehicles that cost on average $5,000 less. On net, Cash for Clunkers significantly reduced total new vehicle spending over the ten month period.

This is remarkable. At the time, the most obvious criticism of the scheme was that it would simply alter the timing of purchases.

And scholars the following year confirmed that the program didn’t have any long-run impact.

But now we find out that there was impact, but it was negative. Here’s the most relevant

How insane did anyone have to be to believe that gratuitously destroying billions of dollars worth of valuable property in the form of serviceable automobiles would have anything other than a net negative effect on the economy as a whole? At the very best, the economy was left poorer by the value of the property that was destroyed.

 

[gipper]

Unintended consequences of a government program ends in negative effects to the economy.
My shocked face is in the shop, the Dems have really given it a thrashing this past 10 years.
And like always, they will never apologize to the poor they hurt.


Three economists (from MIT and Tex A&M) have crunched the numbers and discovered that Obama’s Cash-for-Clunkers scheme back in 2009 was a failure even by Keynesian standards.

The abstract of the study tells you everything you need to know.

The 2009 Cash for Clunkers program aimed to stimulate consumer spending in the new automobile industry, which was experiencing disproportionate reductions in demand and employment during the Great Recession. Exploiting program eligibility criteria in a regression discontinuity design, we show nearly 60 percent of the subsidies went to households who would have purchased during the two-month program anyway; the rest accelerated sales by no more than eight months. Moreover, the program’s fuel efficiency restrictions shifted purchases toward vehicles that cost on average $5,000 less. On net, Cash for Clunkers significantly reduced total new vehicle spending over the ten month period.

This is remarkable. At the time, the most obvious criticism of the scheme was that it would simply alter the timing of purchases.

And scholars the following year confirmed that the program didn’t have any long-run impact.

But now we find out that there was impact, but it was negative. Here’s the most relevant

How insane did anyone have to be to believe that gratuitously destroying billions of dollars worth of valuable property in the form of serviceable automobiles would have anything other than a net negative effect on the economy as a whole? At the very best, the economy was left poorer by the value of the property that was destroyed.

Yes, but it is all about good intentions.

If we could somehow achieve effective government (I tend to think this is not possible), imagine how great this nation could be. Big unlimited government ruled by a small criminal elite, will never work. Government is an anchor that prevents improvement.

 

[Jarlaxle]

Cash for Clunkers was a huge attack on the middle class.

It was a wanton destruction of material wealth. An attack on the USA from within.

During the Obama economic depression "Cash for clunkers" put inflationary pressure on the used vehicle market, thus making it more difficult for Americans to earn a living.

Muhammed, we oppose the Cash-for-Clunkers program due to its cost to our federal budget. It did accomplish its primary purpose, (i.e. it induced increased sales of new vehicles while it was active and it was an immediate economic boost in a time of need.

I believe we have good reason to assume with no analysis effort that our government could have better employed our tax revenues for our economic benefit.
Other than that, it did accomplish everything that could reasonably be expected from such a program.

[There was no benefit to a purchaser that should induce them to participate if the market value of their trade-in was less than the government subsidy].

Since trade-ins were required to be in drivable condition and have been registered and insured continuously for the full preceding year when being traded in, we can reasonably assume that some of those trade-ins would have been of economic use to someone if the program did not require those vehicles to be destroyed to the extent that, effectively as vehicles, or as their engine components, they could not economically be restored to perform their intended function. It was not economically feasible even if cost free do-it-yourself labor was available.

Cash-for-Clunkers required these afore mentioned destructions of values because it would have otherwise been net costlier and less feasible to enforce a program that should not have been enacted.

The program could possibly have only increased prices for clunkers and their used engine parts. It had almost no affect upon other than used clunker engine parts. Thus, it did not put any significant inflationary pressure upon other than clunker vehicles and it could only have had a deflationary effect, (i.e. reduced prices) for used clunker parts other than engine parts. It did not make it more difficult for Americans to earn a living.

Respectfully, Supposn

Pablum. Mostly, it took hundreds of thousands of vehicles off the used caf market...and raised the cost of new cars! I know two people who usex tbe program. One turned in a decrepit Nissan pickup-it had 200,000 miles, a worn clutch, and was badly rotted; basically, it was worth scrap value. (His wife got a new Focus, he got a used Ram 2500.) The other turned in a perfectly-serviceable Ford Ranger-had I known, I might have bought it from him. (He bought a Tacoma.)

 

[depotoo]

Cash for clunkers was to further bail out the auto industry.

 

[Econ4Every1]

There were at least two aspects that weren't considered in the study....

1 Dealerships reported that sales outside the program increased because of interest in the CFC program
2 Taxes generated by the program that helped state and local governments.

Overall, I'm of the opinion that the money could have been spent in other areas and had a greater impact, but I don't think think that they would have been very popular with voters. The CFC program, IMO, was solution seeking a problem.