Cash for Clunkers Not as Simple as One Might Think

Posted 9/1/2008
By Robert L. Redding, Jr.

A recent Op-ed in the New York Times by Alan Blinder, Ph.D., addressed the issue of the government purchasing older, high-polluting vehicles and scrapping them. Blinder is a former vice chairman of the Federal Reserve Board and economic adviser to former President Bill Clinton and U.S. Sen. John Kerry, D-Mass. Blinder currently serves on the faculty of Princeton University.

He argues in his "Cash for Clunkers" piece that although some state governments have attempted these programs, it would be in the best interest of the federal government to consider a "Cash for Clunkers" program. Specifically, this program would provide an "Eco-Friendly Stimulus" to the U.S. economy. He highlights a California study that estimates that cars 13 years old and older account for 25 percent of the miles driven but 75 percent of all pollution from cars. State "Cash for Clunkers" programs have been pursued in California, Colorado, Delaware, Illinois, Texas and Virginia.

Blinder believes that "People who sell their clunkers would receive government checks, perhaps paid to them at the motor vehicle bureau office where they turn in their old vehicles. They would be free to spend this money as they see fit, whether on a new car or truck or some other form of transportation - or anything else. To ensure that the program really pulls clunkers off the roads, only vehicles that had been registered and driven for, say, the past year would be eligible."

A top-end program will target 75 million clunkers with a cost less than $20 billion. Blinder suggests that the government might consider refitting these vehicles with new emissions controls and reselling them.

What he fails to consider is that the public would be better served with a repair option for these older, high-polluting vehicles. If all vehicles on the road today were subject to emissions tests, federal assistance to get a certain, targeted group of these vehicles repaired and back on the road would better serve the environmental and economic stimulus needs of the public.

It is difficult to argue against reducing passenger vehicle pollution or stimulating a troubled economy. Despite Blinder's eloquent points, there are many more complex pieces to the "Cash for Clunkers" issue than he maintains.

As the writer stated, the programs in place in a few states are not funded properly. Part of this reason is the opposition to the concept of the government - state or federal - paying vehicle owners for high-polluting vehicles. Multiple questions arise: Who pays? How much will be paid for the clunker? Will it be enough money to purchase a new or "almost new" vehicle? How much does this really impact the environment?

The U.S. Congress has considered this issue on multiple occasions and wisely decided this was not good public policy. The Congress did come close to addressing a serious flaw in this policy concept when former U.S. Sen. Tom Daschle, D-S.D., offered for discussion the concept of "Cash for Clunkers" program with a "repair option." Owners of high-polluting vehicles could receive repair assistance from the government to make their vehicle more environmentally friendly and keep their working vehicle. It is highly unlikely that enough money can be paid for these high-polluting vehicles by the state or federal government so that recipients can purchase another vehicle. Assistance with repairing these vehicles offers the vehicle owner the opportunity to repair the vehicle and be able to use the vehicle as they have in the past. I would be remiss if I did not offer that a repair option would help small businesses such as independent automotive repairers, car dealers, parts distributors, parts manufacturers and, yes, even automobile manufacturers that sell a lot of vehicle parts.

If economic stimulus is the goal of this program, then stimulate the entire automotive industry. A repair option in a Cash for Clunker program does just that.

If pollution is the target, then the U.S. Environmental Protection Agency (EPA) and many states need to get back to ensuring that vehicle emissions-testing programs cover the nation, not just some states and non-attainment areas. The current leadership of the EPA has not encouraged these programs. Frankly, we have seen testing programs contract versus expand during the past eight years. Job commuters, shoppers and families vacationing drive into non-attainment areas every day without any semblance of vehicle pollution responsibility. Emissions testing should apply to all vehicles on America's highways whether it is a state or national program and whether you live in an urban, rural or suburban community.

A small payment for a "clunker" won't stimulate the economy. How does the recipient get to work if they needed a car in the past? These checks will just provide one more credit card payment!

Stimulate small and large businesses with a repair option. Reduce vehicle pollution with a national vehicle emissions-testing program.

Bob Redding is the Automotive Service Association's Washington, D.C., representative. He is a member of several federal and state advisory committees involved in the automotive industry. For more information about the legislative activities of ASA, visit www.TakingTheHill.com.