Posted Monday, Aug. 24, 2009, at 5:48 PM ET
The Cash for Clunkers program, in which the government is offering Americans up to $4,500 if they trade in gas guzzlers and purchase more-efficient new cars, is winding down, with an 8 p.m. Monday deadline for filing applications.
Has it been a success? For America's struggling car dealers, it has been a runaway success. The $1 billion in government grants promised initially was committed in a week, so Congress responded by adding another $2 billion of funding. As of Monday afternoon, the Department of Transportation said 625,000 applications have been filed, for $2.58 billion in rebates. According to J.D. Power, August U.S. car sales are likely to top 1 million, up 2 percent from August 2008 in a year when year-over-year sales figures have fallen sharply. As environmental policy, Cash for Clunkers has perhaps been less successful. My colleague Nina Shen Rastogi has argued that it's an expensive way to get gas guzzlers off the road.
And, the most important question of all: How effective has it been as economic stimulus? Since the onset of the crisis, top White House economics adviser Larry Summers has argued that stimulus efforts should be "timely, targeted and temporary." As the crisis deepened, Summers went one letter earlier in the alphabet to alliterate that stimulus should be "speedy, substantial and sustained." Judging by the results so far, Cash for Clunkers meets five of Summers' six criteria—all but "sustained."
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