Cash for Clunkers - a surprising success

The summer's surprise hit, Cash for Clunkers, is under fire despite its surprising success in trading up for higher fuel efficiency (critics were worried about the lax mileage restrictions).

James Hamilton at Econbrowser compares it to plowing under crops during the Great Depression, but Michael Roberts at Greed, Green and Grains has a good rebuttal:
It does seems strange to destroy perfectly useful capital. But destroying old and polluting capital (clunkers) can be a bit different than destroying nondurable goods like crops. It's different because old cars pollute more than new cars and because this is an unusual time when a lot of excess car production capacity sits idle. If destroying a few clunkers causes idle factories and labor to be put to good use producing new less-polluting cars, then there could be a genuine social benefit. Indeed, it would seem that, as a first approximation, each clunker clunked would be replaced by a new car produced using resources that would otherwise be sitting idle. Since each new car created clearly embodies more social value than each car destroyed, it doesn't seem such a bad deal. And I'm not even counting multiplier effects.
After blowing through the entire allocated $1bn in a single week, the latest news appears to be that the Senate will vote on a $2bn funding extension (out of a $6bn pool of DOE money for clean energy loan guarantees) before the August recess. Some politicians aren't happy, but I'll go to Geoff Styles for the closing synthesis:
When you examine the way the House of Representatives came up with the $2 billion to stretch it through the end of September, it is clear that they viewed it as an extension to--or more properly an acceleration of--the federal economic stimulus. Their bill, which is a model of brevity and simplicity, shifted $2 billion from a $6 billion appropriation for DOE loan guarantees to advanced energy projects. Considering that the DOE still has yet to dole out all the money originally appropriated for this purpose when it was funded under the Energy Policy Act of 2005, and that their highest-profile decision so far was to turn down an application from a major nuclear fuel processing project in Ohio, it seems fair to say that Cash for Clunkers will get this money into the economy vastly quicker than under a stimulus program that has taken its own sweet time about stimulating anything.

As New York Times columnist David Brooks described Cash for Clunkers in last Friday's weekly segment with Mark Shields on the News Hour, "It's costing some billions of dollars, but it's actually temporary, timely and targeted, so I'm all for it." Despite the program's reported administrative glitches, Mr. Shields liked it, too. That may be as close to a bi-partisan consensus as we are likely to get all summer.
In the end, Cash for Clunkers has not only exceeded (admittedly low) expectations on the climate front, but also turned out to be as effective a stimulus as we've seen in the past year.

Update: Via Green Sheet, some relevant numbers:
Through early Tuesday, the clunkers program had recorded 157,000 transactions worth $664 million. Eighty-three percent of the vehicles traded in were trucks or SUVs, while 60 percent of the vehicles purchased were passengers cars, for an average increase in fuel efficiency of 61 percent, Gibbs said.
This supports the argument that, despite lax minimum fuel efficiency requirements for the replacement cars, the average fuel efficiency gain being realized is considerable.

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