Clunkers for Cadillacs?

Last week, as lawmakers were on their way back home for August recess, they were only too happy to rubber stamp the extension of what looked at the time like an unequivocally successful and unanimously popular program. But, in their rush to get an extra $2 billion out the door, Congress overlooked several possible tweaks that might have made the Cash for Clunkers program a more sustainable economic stimulant and a “greener” environmental program.

The New York Times reports that the most popular new cars under the program are now in short supply, and yet the program has no provision in place to provide a type of “pay me later” voucher for buyers to apply to later purchases when dealerships can replenish their inventory. The AP wants to know how much Clunker money is being used to buy vehicles like the Cadillac SRX Crossover, but the government has not been forthcoming with data since a July 31 request.

Those execution problems are being compounded by criticisms about the program’s design. In spite of environmental economists’ protestations and the presence of similar options in past clunker pilots, the program does not offer consumers the opportunity to earn the $4,500 incentive for anything other than the purchase of a new car. For example, the Clunkers program might create a real green wave if consumers were able to trade in their clunker and claim cash to pay for things much greener than buying a new car: like making energy efficiency improvements to their homes and offsetting the cost of mass transit passes.

Finally, with Edmunds.com reporting that interest in the Clunkers program waned after the first few frantic days of activity, there is no sunset provision in the bill to put unallocated funds back into the treasury, raising the possibility that the incentive will be lying around for use by buyers who are less motivated by the opportunity to improve their personal transportation efficiency and more interested in simply buying a new car.

The program is available to buyers who trade “clunkers” that get as high as 18 mpg for new, “green” vehicles that get as low as 22 mpg. With lots full of Rams, F-150s, and Cadillac SUVs that dealers are anxious to move, a lot of the $3 billion dollars spent on CARS could go to help buyers upgrade their old SUV or truck with…a new SUV or truck.

Flickr photo courtesy of Rutland (VT.) Herald, Vyto Starinskas.

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