Cash for Clunkers? Really?

A few people have asked me what I, as an ethical consumer, think about the Cash for Clunkers program. This extremely popular program allows individuals to receive a federal subsidy when they trade in an older gas-guzzling car for a new fuel-efficient vehicle. Consequently, the program  is being dubbed by Nancy Pelosi and others as a win-win-win situation because it stimulates the economy, the auto industry, and helps the environment all at once.

But does Cash for Clunkers really help the environment? suggests there could be a positive effect on the environment, though they ignore the environmental cost of manufacturing a new car in their assessment. On the other hand, The Atlantic provides a concise summary of the program, and clearly demonstrates that Cash for Clunkers favors SUV and truck drivers more than other kind of vehicle owners. First of all, you're only allowed to participate in the program if your current vehicle gets under or equal to 18 miles per gallon.

Secondly, if you trade in an SUV or truck for a new SUV or truck, a 2-4 mile per gallon improvement in fuel economy will earn you a whopping $3500 federal subsidy. On the other hand, car owners are required to improve their fuel economy by 4-9 miles per gallon in order to receive the $3500 federal subsidy. Due to the less than rigorous fuel-efficiency requirements, NPR notes that trading in your old Hummer for a Hummer H3T pickup could qualify you for the subsidy.

On top of all this, this federal program is costing tax-payers beaucoup bucks that could, I think, be spent elsewhere. Plus, there's the waste issue: where are we putting all these old clunkers?

Sadly, I have to conclude that Cash for Clunkers is a wasteful, potentially damaging program that doesn't live up to its hype.