You’ve no doubt heard by now that the Car Allowance Rebate System, a federal program offering incentives for people to trade in their old cars, is apparently running out of money.
There are two ways of looking at this, depending on whether you’re a glass-half-full type of person. The intention of the program was to get gas-guzzling and polluting older cars off the road and help boost sales for struggling car manufacturers. At $3,500-$4,500 a pop, the $1 billion budgeted for the program should have subsidized the sale of as many as 285,000 cars in one week (not allowing for administrative costs etc.).
Americans typically buy about 10 million cars a year, a number that averages to 192,000 a week, but varies seasonally. So presumably we’ll see a spike in auto sales this month, though not necessarily a staggering one.
Clearly, the program is working. Maybe too well.
Now the question is whether the government should continue to provide the subsidies. Rep. Ed Markey, D-Mass., vowed to continue the program until 1 million cars were taken off the road. By my calculation, they’ll need at least another $3 billion to pay for that. Where’s that money going to come from?
Rep. Fred Upton, R-Mich., says the program can be funded with the “unspent stimulus dollars that are gathering dust.” It’s good to know that the government has big piles of cash lying around, or perhaps stashed in clandestine locations throughout Congressional office buildings, that they have absolutely no idea how to spend.
So, what’s the objective? Is it to curb energy consumption and fight pollution? If so, are there better ways to spend that money toward that goal?