Cash for Clunkers
Sounds great, right? Appropo to the post preceding this one, it’s amazing how much Democrats can resemble Republicans when special interests wrap their grubby tentacles around them.
Adam Seigal has the definitive post on this:
In short, the bill is promised to target selling 1 million more vehicles before the end of the year and support these three policy priorities:
* Reduce dependence on foreign oil,
* Reduce air pollution, and
* Reduce greenhouse gas emissions.
The bill does this via “cash for clunkers”, vouchers to owners of old vehicles to encourage them to go shopping for a new vehicle and scrap the old one. As an example, when it comes to light passenger vehicles, owners (at least one year registered) of a car rated at less than 18 miles per gallon can receive a $3500 voucher (tax free) for a new car if it gets at least 22 miles per gallon and $4500 if it gets at least 28 mpg.
Why is this a bad bill, on both basic policy and basic analytical reasons?
1. The fuel saving requirements are absurdly low.
2. The actual oil demand reduction per tax dollar invested is absurdly low.
3. The bill, as structured, is overly restrictive in a counter-productive way.
4. There is a basic question as to equity.
5. This is structured poorly, using “mpg” which provides less visibility on impact than the better “gpm” (gallons per mile).
Adam’s full post explains 1-5 in detail and is worth the read.
But I think the critique misses an important point. I emailed the following to Adam after reading his post:
what about the cost of production of the replacement vehicles? Smelting all that steel isn’t all that environmentally friendly, is it? Think about all the diff’t components of a car… from the oil-based plastics, to the environmentally expensive tires, to the mining required to get at the platinum in the catalytic converter…
So if I bought a vehicle 13 months ago that gets 18 miles per gallon, I can trash it for a brand new car that gets 22 mpg? It’s not that I think that will happen all that often under this bill, but it might… For example, are car rental agencies excluded from this bill, or is this a windfall for them?
Even if the bill doesn’t end up incentivising obviously wasteful trade-ins, it is unclear to me whether or not the cost of production was taken into account. From the looks of the rest of Adam’s criticism’s, I’m skeptical.