Cash for Clunkers is a colloquial term for the Car Allowance Rebate System, a program of the United States government intended to reduce the number of older higher polluting cars, while simultaneously stimulating the economy to the point of orgasm.
The Car Allowance Rebate System, or "Cash for Clunkers", was a program of the United States government. It used the tried and tested government method of handing out money to various people and/or groups until there wasn't any more, thereby resulting in the prosperity we all enjoy today.
The program officially got started on July 1, 2009, although nothing was processed before July 24, 2009. The initial $1 billion that was to pay for it was gone in about six days. That's not Cracked being sarcastic. That's the actual estimate from the Department of Transportation. Just imagine what would have happened if car companies had sold some of the really cool stuff they won't let us have (see 8 Awesome Cars They Won't Let You Buy).
Congress kicked in another $2 billion at that point, deeming it a worthwhile expenditure if it would help to get the car companies back on their feet. After all, what kind of unpatriotic person would want such proud paragons of American industry to fail?
On a totally unrelated note, the company that sold the most cars under the program was Toyota, with almost 20%. Honda and Nissan had to make do with a measly 22% or so between them.
Some people bought new cars before the program started, under the assumption that they would get a trade-in at a later date. In the case of at least one company (Hyundai), money was disbursed by the parent corporation to dealerships to give these rebates, with the idea that the company would get it back once the program got rolling.
Those who are fond of combining comedy and tragedy will be pleased to learn that the Environmental Protection Agency suddenly revised the eligibility guidelines right before the start of the program. This ensured that a number of trade-ins did not qualify for the rebate.
When asked for a reason for the decision, a spokesperson for the EPA replied, "We think the best way to help the economy is for consumers to flush enormous wads of money straight down the crapper."
It could be argued that destroying cars isn't a very good economic stimulus package, as it destroys stuff that's made out of stuff, or as some economists refer to it, stuff.
Many of the cars turned in under the rebate program were in driveable condition. However, to prevent them being exported out of the country, the engines were destroyed by replacing the oil with a sodium silicate solution, which causes the engine to cease. Also, resources had to be put into manufacturing new cars, rather than something useful, like new bongs or posters of Jessica Alba.
Some people believe that the best thing to do for the economy is to keep money out of the hands of the government altogether (see 7 Retarded Tax Evasion Schemes People Are Actually Trying).
Christopher Westley, an economist at Jacksonville State University, went further in his condemnation of Cash for Clunkers. He says the program sticks it to the poor and lower-middle class by raising the price of cars, and raising general price levels because of the inflation required to finance the program in the first place. Westley even went so far as to call Cash for Clunkers the "I Hate the Poor Act of 2009."
Cracked would like to see this level of transparency in more legislation, and would like to suggest the following revisions to some famous acts and laws:
- The Patriot Act will now be known as the "We're Afraid of Brown People Act of 2001,"
- The Marihuana Tax Act will now be known as the "We Need a Reason to Arrest Mexicans Act of 1937," and
- Executive Order 9066 will now be known as the "Let's Lock Up Every Single Japanese Person We Can Find Act of 1942."
The average fuel economy of a "clunker" was 15.8 mpg, compared to an average of 25.4 mpg for the car that replaced it. So the environmental effects look good, at least on paper, and at first glance. On second examination, not so much, indicating that Cash for Clunkers may be another "environmental" program with questionable benefits (see 5 Ways People Are Trying to Save the World That Don't Work).
Many less than green cars were purchased under Cash for Clunkers, including a lot of SUVs, trucks, luxury sedans, and crossover vehicles. Some of the vehicles that were eligible (including the Hummer H3T and the Cadillac SRX) have fuel efficiency ratings under 20mpg.
It isn't just that the cars purchased fell short of being green vehicles, but that it actually pollutes the environment simply to make a new car. Somewhere between 3 to 12 tons of carbon dioxide finds its way into the outside world for every single car manufactured. That's right, producing a new vehicle creates pollutants of significantly more mass than the car itself.
Any positive environmental effects from Cash for Clunkers are arguable. Around 250,000 vehicles were traded in throughout the life of the program. That seems like a big number, until you realize that the total number of cars in the United States is around 260 MILLION.