The Wall Street Journal has just labeled the Cash for Clunkers program “one of Washington’s all-time dumb ideas.” (Hyperbole, of course — no program costing a “mere” $3 billion could possibly qualify for the all-time dumb list.) Here’s their reasoning:
Last week U.S. automakers reported that new car sales for September, the first month since the clunker program expired, sank by 25% from a year earlier. Sales at GM and Chrysler fell by 45% and 42%, respectively. Ford was down about 5%. Some 700,000 cars were sold in the summer under the program as buyers received up to $4,500 to buy a new car they would probably have purchased anyway, so all the program seems to have done is steal those sales from the future. Exactly as critics predicted.
Okay. I’d want to see a few more months of statistics before concluding that most C4C buyers bought cars “they would probably have purchased anyway,” although that’s undoubtedly true in many cases. Also, how does the September report compare with year-ago comparisons for the months just before C4C went into effect? (I spent a frustrating 10 minutes looking for raw statistics before realizing I just didn’t care enough to spend 11 minutes. But why don’t news reports provide links to data sources the way blog posts do?) Since September marked the start of the financial meltdown I suspect that might have been the last relatively strong month for car sales, which would skew the year-earlier comparison.
I’m still largely opposed to the very idea of artificial spending programs in the name of stimulating the economy, and I’m ferociously opposed to the wasteful and dishonest porkulus bill. But if there was going to be a fiscal stimulus plan — and the political realities of the spring left no doubt about that — then I still think C4C was as good a stimulus as any. And Larry Kudlow agrees with me!