Cash for Clunkers

How to kill four birds with one stone? Alan Blinder writes in the Sunday, July 27, 2008 New York Times Sunday Money section that "Cash for Clunkers" might just do the trick. Alan suggests that the government pay a premium to buy the oldest, most polluting vehicles and then scraps them. The idea brings four beneficial results:

• Improves air quality in the nation by taking the worst polluting vehicles off the road. A California study estimates that cars 13 years or older account for 25% of miles driven and 75% of all pollution from cars.

• Provides additional cash to low-income people since it's a good bet they own the majority of older cars.

• Stimulates the economy in general since those low-income folks will no doubt find good use for the additional cash.

• Stimulates the auto industry in particular since some of those clunkers will need to be replaced with newer cars.

Alan goes into some detail in how to target the program including restrictions to avoid people gaming the program but his idea sounds promising. In fact, why not extend the program beyond cars to home appliances. Here again, older appliances like refrigerators, washers and dryers are not as energy efficient as newer models, and finding a way to scrap these models would no doubt result in lower energy use. This addition to Cash for Clunkers would offer similar benefits to scraping old autos, the difference being energy saving vs. lower pollution and stimulus of the retail vs. auto industry.

Of course there is a cost to taxpayers for such a program but Alan argues that the bill would be significantly lower than other programs that only provide one or two of the benefits of Cash for Clunkers.

Read the Alan's entire column at: http://www.nytimes.com/2008/07/27/business/27view.html?_r=1&scp=1&sq=Cash%20for%20clunkers&st=cse&oref=slogin

If you see the merits, write your congressperson.