Fixing Cash for Clunkers
by Carl Mrozek
Michael Niman’s derision of the CARS program (“Cash for Clunkers,” Artvoice v8n31) as an auto industry bailout masquerading as the front lines in the war on global warming was largely true. But, it missed a bigger point, i.e. that CARS, a micro-project within the economic stimulus program, has wildly exceeded expectations by propelling the Big Three to their most profitable quarter in the past few years, triggering a stock rally which added many billions in value to many stocks, including the two auto companies we now own a major stake in. Rather than grouse about what it doesn’t do, I suggest viewing the $950 million budgeted for CARS, so far, as an insurance premium on our $84 billion investment in GM and Chrysler.
If the Senate approves the extra $2 billion voted by the House, for a total $2.9 billion, this is still within the cost parameters of a commercial insurance premium that greatly improves the chances of recouping our investment in Chrysler and GM. If they double in value in the next several years, taxpayers might double their money to $168 billion or better—a fantastic return on a four-year investment of $12 billion or so. When you factor in the value to our economy of jobs saved and created, plus all of the economic activity they generate, the payoff can be substantial and much faster than with any other current economic stimulus programs.
There is also an environmental payoff for extending CARS now and for several more years. To date, the typical CARS participant improves their fuel efficiency at least nine miles per gallon or better. That’s another 3/4 million green cars/year, multiplied by four if we extend the program to the end of Obama’s term. In 2013, the average fuel efficiency of new vehicles must be over 25 miles per gallon. New hybrids may be double that, and then there are all electric cars like Chevy’s Volt. Making CARS an ongoing program could stimulate US consumers to keep upping the fuel-efficiency ante as new cars get leaner and greener. Once gas prices rise another dollar or two/gallon, most of us will again be clambering for gas miser vehicles, with or without CARS. The faster we upgrade the entire fleet, fuel efficiency-wise, the more options we’ll all have for new or used “green vehicles.” Certainly we don’t want to do this at the expense of expanded mass transit, but that is a much more complicated and capital-intensive proposition, which can be pursued incrementally and at the same time
Let’s be clear, CARS is not a panacea for global warming. Nothing is. However, it has done something that no other stimulus program has yet done: jolt our sluggish economy using mostly private dollars, by using federal dollars sparingly and wisely to harness one of our greatest natural resources—America’s consumerism and our appetite for a great deal. Coincidentally, it also has millions of Americans thinking lean and green for their next car purchase, enabling us all to play a small part in reducing our carbon footprint, without breaking out a sweat.
Hopefully, a successful, expanded, CARS would encourage the Obama team to roll out similar programs for home and office with greener hot water heaters, furnaces, air conditioning, home insulation, solar and wind power etc. CARS could possibly be the model which gets us all on the road to greening our environment and also our sluggish economy, hopefully employing millions in the process. Then the big challenge for Western New Yorkers will be to determine how to get our piece of the green action!
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Issue Navigation> Issue Index > v8n32 (week of Thursday, August 6, 2009) > Letters to Artvoice > Fixing Cash for Clunkers
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