Carney on Cash for Clunkers

Former CEI Warren Brookes Fellow Tim Carney, highlights the high cost of the Cash for Clunkers program, which I wrote about here yesterday.

Two experts — car-selling Web site Edmunds.com and economic modeler Macroeconomic Advisers — estimated that a vast majority of the trade-ins that take advantage of Cash for Clunkers would have happened anyway.

But were Cash for Clunkers mere waste. The program has created some winners.

One lobbyist for this bill was Nucor Steel. In Cayuga County, N.Y., Nucor turns scrap steel into sheet metal and other steel products. The clunkers are now becoming a subsidized feedstock for Nucor, which helps explain why Sen. Chuck Schumer, D-N.Y., has led the push for $2 billion extra in clunker cash.

Then there’s Enterprise Rent-a-Car also backing the bill, supposedly out of solidarity with automakers. But Enterprise sells its rental cars after a few years. As a rental firm that buys its cars new, Enterprise benefits every time someone else scraps a used car.

And losers.

On the other side of the lobbying debate were non-dealer auto-repair shops, whose businesses depend on used or older cars, which the owners don’t take to the dealer for repair. Also, the Automotive Aftermarket Industry Association opposed the bill.

These are the guys who can sell you the headlight for your 1998 Ford Taurus, or who rebuild an engine out of a junked car.

Now, as Congres considers an additional $2 billion in funding for Cash for Clunkers, the Obama administration is refusing to release data on the effectiveness of the program. But hey, it’s not like this administration and Congress have tried to rush legislation before!