“Cash for Clunkers,” the 2009 Obama administration stimulus program designed to spend $2.85 billion to jumpstart the auto
industry, turned out to be a complete disaster — for the auto industry.
In the minds of Obama’s team of advisers and economists, the program made total sense, of course. The plan was to dangle a $4,500 credit to persuade car owners to trade
in their older automobiles for new cars with better fuel efficiency. It
would stimulate an economy then in the midst of a deep recession. As a
bonus, it would mean less oil consumption and cleaner-running cars.
The law of unintended consequences is a brutal thing, though, especially for inexperienced, shortsighted policymakers.
According to the findings of three Texas A&M University economics professors, “Cash for Clunkers” ultimately caused auto industry revenue to shrink by about $3 billion in less than a year
industry, turned out to be a complete disaster — for the auto industry.In the minds of Obama’s team of advisers and economists, the program made total sense, of course. The plan was to dangle a $4,500 credit to persuade car owners to trade
in their older automobiles for new cars with better fuel efficiency. It
would stimulate an economy then in the midst of a deep recession. As a
bonus, it would mean less oil consumption and cleaner-running cars.The law of unintended consequences is a brutal thing, though, especially for inexperienced, shortsighted policymakers.
According to the findings of three Texas A&M University economics professors
, “Cash for Clunkers” ultimately caused auto industry revenue to shrink by about $3 billion in less than a year
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