Biden Proposes “Cash for Clunkers” 2.0

Failed Program Cost Auto Industry $4 billion

Posted on Jul 20, 2020

Last week, Joe Biden unveiled a radical $2 trillion climate plan which, in addition to taking key provisions from Rep. Alexandria Ocasio-Cortez’s Green New Deal, included a proposal for a new Cash For Clunkers program. This program failed miserably under the Obama-Biden administration.

Biden’s new Cash For Clunkers proposal calls for consumer rebates to swap “old, less efficient vehicles” for newer American vehicles built from materials and parts sourced in the United States. These rebates would be accompanied with new targeted incentives for manufacturers to build or retool factories to assemble the vehicles, parts, and associated infrastructure in the U.S.

The original Cash For Clunkers program, which Politico described as a“sputtering old jalopy that deserves to stay in the scrap yard,” was one of the most prominent parts of the Obama-Biden administration’s 2009 stimulus. The program, the Car Allowance Rebate System (CARS), provided Americans with a voucher for $3,500 to $4,500 if they traded in an older, “gas-guzzling” vehicle for a newer, more fuel-efficient vehicle. The program cost American taxpayers $3 billion and did little to reduce carbon emissions, with the average fuel economy of vehicles in the U.S. only increasing by 0.65 miles per gallon. Brookings Institution researchers found the program primarily benefited wealthier Americans and wrote that in the event of a future recession they “would not recommend repeating the CARS program.

In addition to doing little to increase fuel economy, a 2014 study for the National Bureau of Economic Research found the program actually reduced new vehicle spending costing the auto industry $3 to $4 billion and gave the majority of the subsidies to those who would have purchased a vehicle regardless of the program.

Even former Obama-Biden administration economic advisor Austan Goolsbee said he would not have backed Cash For Clunkers if given a second chance.

Despite the obvious failures of the program, in 2011, Biden said the program “made sense” and called it an “unqualified success.” Joe Biden’s willingness to double-down on the failed agenda of his former administration shouldn’t come as a surprise. It’s exactly what Americans expect from a career politician who’s spent more than four decades in the Washington swamp.