Monday, August 10, 2009

"Cash for Clunkers"

Talk of the town: "Cash for Clunkers" (a government program that gives rebates to people who trade in their old cars for more fuel-efficient models) has run through $1 billion in about a week, which is quite something considering that that $1 billion was supposed to last until November at least.

The current angle: The national conversation has been focusing on what this running out of money means. The left calls it a success. The right calls it a failure.

What really matters: What makes "Cash for Clunkers" different from a pure subsidy is its environmental component. This is crucial because it is this difference that makes it a public-interest program--the public-interest of course being that greener cars lead to cleaner air and solve some foreign policy problems. Now, some people have suggested that the process of junking the clunkers greatly dampens the environmental benefit of greener cars. This claim may be bogus, but these are the kinds of questions people should be asking and answering. The focus of the conversation should really be on whether the program is achieving its purported objectives, and achieving them efficiently; not on the program's popularity.

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