"Cash for Clunkers" Gets Scrapped
Reuters reports that the “cash for clunkers” program, which I criticized in an earlier blog post, has been removed from the stimulus package.
I wish I could say that the reason for abandoning the program was that policymakers had come to understand the likely adverse economic consequences of the program. The real explanation, as usual, appears to be political, not economic.
While U.S. automakers supported the plan, Reuters says that there was opposition “from foreign manufacturers whose operations are clustered in states represented by conservative Republicans” because of a “buy American” clause in the plan.
I’m sure the government will have no trouble thinking of some other ways it can spend that $16 billion, most of which are probably even worse than “cash for clunkers.”