"Cash for Clunkers: Better than we thought"
This headline from CNN Money. The story goes on to discuss recent polling data from Maritz.
Maritz estimates that a total of 765,000 new vehicles were sold because of the program. Those cars wouldn't have rolled off dealer lots without the offer, they say.
That's more than double the Department of Transportation's estimate of 346,000 sales that wouldn't otherwise have been made.
Maritz' estimate of additional new car sales resulting from the program is actually even larger than the total number of vehicles sold under Cash for Clunkers.
Government records indicate that a total of 677,000 new vehicles were purchased under the program.
According to Maritz, 542,000 of those sales were made to people who didn't plan to buy a car otherwise. Additionally, another 223,000 people were lured into dealerships by the program, learned they didn't qualify for the benefit, but purchased a car anyway.
It's that last paragraph that proves part of the economic cost of the Cash for Clunkers program. The fact that people who owned cars with which they were perfectly satisfied, were lured into destroying these cars in order to take advantage of the subsidy. Any subsidy produces economic waste.
Second, the money spent purchasing new cars, especially by those who had no intention of buying a car, is money that was not spent elsewhere in the economy, therefore destroying jobs elsewhere.
Comments