(photo credit Wen-YanKing via the Flickr Creative Commons license).

The Cash for Clunkers Agreement is a short-term attempt to stimulate consumer spending on new cars, nothing more, nothing less. It’s a no-brainier from a political perspective because voters will support any program that will give them thousands of dollars to trade in a junker for a new car.

It is also another example of why you should not be holding your breath while waiting for politicians to fix global warming. As noted in Hiskes’ post, the global warming impact of making a new car nullifies any savings from the marginally better gas mileage required to qualify. As with corn ethanol policy, they are about to make things worse again by taking two steps back for every step forward.

There are a lot of questions as to how it will work. Here are just a few:

  1. Can I just buy a junk car for a few hundred dollars and turn it in?
  2. If I turn in my SUV do I have to buy another SUV instead of something like a Prius?
  3. Can I turn in the car I keep parked in the alley for hauling junk twice a year?
  4. Will all cars turned in be scrapped, including cars that get much better mileage than others being turned in?

I don’t know the answer to any of these questions but I don’t think they matter. The government is just trying to get you to go buy a new car to clear the inventory on dealer lots. Dealers sure won’t care about what you turn in. You could probably get $4000 for your grandma. But if the answer to question 2 is yes, then this piece of legislation has taken government bungling to a whole new level.

For more on the topic:

http://www.guardian.co.uk/commentisfree/2009/mar/10/car-scrappage-payments
http://greeninc.blogs.nytimes.com/2009/04/06/are-cash-for-clunkers-programs-green/
http://wheels.blogs.nytimes.com/2009/05/06/congress-close-on-cash-for-clunkers/