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Clunker of a program?


August 12, 2009
The federal government has taken many actions to rescue the struggling economy, but the so-called cash for clunkers program likely has been the most effective. The $1 billion for the program was to have lasted into the fall, but was exhausted within the first week, as people lined up at car dealerships to trade in their gas-guzzlers for new, more fuel-efficient vehicles, and more money is being appropriated.

Anytime $1 billion is injected into the economy, and the struggling auto industry in particular, that quickly, it's difficult to argue it won't boost the immediate economy. However, a closer look at the program merits questioning whether the economic stimulation is long-lasting or merely ephemeral, or, even worse, detrimental in the long run.

Naturally, people are more hesitant to purchase a new car during a major recession, and the program, which offers a $4,500 discount to those trading in their gas hogs for more environmentally-friendly models, has encouraged them to buy. But what exactly are they buying and at what cost to the long-term economy?

As of Friday, the top 10 gas-guzzlers to be traded in were all American vehicles (Ford, General Motors or Chrysler), but only four of the top 10 new, more fuel-efficient vehicles purchased were American. Of those four, only one — the Ford Focus at No. 2 — was in the top five.

That's OK, because it's stimulating the overall economy, not just the manufacturing sector of the automobile industry, right? Not so fast. The program mandates that the vehicles being traded in — these include Ford Explorers, Dodge Caravans, Jeep Cherokees and Ford Windstars — have their engines disabled.

Many of these vehicles are ideal for struggling families who need the space of an SUV or minivan and cannot afford a car payment upward of $400 per month. However, instead of keeping these vehicles in circulation on the dealer lots, which also would benefit local eco-nomies, or allowing them to be donated to charities, like the American Cancer Society or Volunteers of America, Congress has deemed it more important to make sure these gas hogs or any part of their engines never touch American highways again.

If the environmental impact was real, the legislation would make sense. Unfortunately, a report from The Associated Press shows it's not. The program, according to the AP, which used Department of Transpor-tation numbers, has reduced carbon dioxide emissions by just 700,000 per year. That equates to about 57 minutes' worth of the country's annual CO2 output, about 6.4 billion tons.

The amount of gas saved by the 250,000 vehicles traded in so far — some 72 million gallons per year — also is negligible, according to the AP. That amount may seem like a lot, but it equals about the amount used by American drivers in just 4-1/2 hours.

In June, Harrison County's unemployment rate was 9.7 percent, while Crawford County's was even higher, at 11.3 percent; both were about 4 percent higher than just a year earlier. In addition, just released Census data shows the number of uninsured persons in Harrison and Crawford counties was 13 and 17 percent, respectively, in 2006. As the weakened economy has cost people their jobs and forced small businesses to drop health insurance plans just to keep the doors open, it's a safe bet that those numbers are even higher now.

Is this really the time to take low-cost automobile options away? Those who have an old "clunker" as defined by the federal government may be able to get a great deal — some $16,000 cars have been sold for half that after the federal discount and dealer rebates — but not everyone has a clunker to trade or can afford even the discounted price.

Like with many government programs, the intent behind cash for clunkers is good, and there's no denying the short-term economic gain. However, also like with many programs, the rush to implement it may result in long-term pain.

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