Wheee! Cash for clunkers 2: Rise of the Green Machines

Obama in clunker

by nkronos on March 29, 2011

Senator Debbie Stabenow–not content with the soaking American tax-payers took over the miserable failure known as Cash for Clunkers to prop up her home state of Michigan–has proposed that the horror-producing studio of our federal government greenlight its sequel, “Charging America Forward.” Although the “charging” there is supposed to refer to all the hours and electricity charging these cars will consume, it conjures more the federal government’s credit card, as it goes on yet another unpaid-for bender at the cost of tomorrow.

Suggestion for new Obama administration slogan to replace the easily lampooned WTF: how about “Spending the Future”? Or with a nod to the administration’s Tea Party friends, “Spending the Future Unsustainably” (STFU).

What about our high-speed rail system that President 0 keeps pushing? Do we need both electric cars and high-speed rail?

As with cash-for-clunkers–which wound up costing taxpayers $24,000 per car sold (and in most cases really only pushed forward a vehicle’s replacement, rather than creating a sale)–Stabenow’s program does more harm the more successful it is. She wants to give a rebate of $7,500 for every plug-in electric vehicle purchased. She envisions states and companies likewise replacing fleet cars under this incentive.

Currently the United States has about 250 million registered passenger vehicles. If owners replace 1 percent of those vehicles in response to Stabenow’s initiative,  the government will spend almost $19 billion on this program. Given how freely the money flows in DC nowadays, that may not seem like much, but it is more than 3 percent of the non-defense discretionary spending. In other words, it’s a measurable chunk and thus commitment of what’s available to the government after you take out SS, Medicare, Defense, and interest.

Fat chance, however, that Charging America Forward will have anything like that rate of success. No doubt part of the reason Stabenow wants the government to come to the electric car’s rescue is dismal sales thus far: the Chevy Volt sold a whopping 281 units last month.

Going back to cash for clunkers, umm, didn’t we just pay for this? If CfC worked at all, wasn’t it aimed at getting the least fuel-efficient cars off the road and putting drivers in greener vehicles? So which vehicles will these electric ones be replacing?

One of the reasons the American auto industry has tanked over the years is just this cyclical use of rebates as a sale incentive. When manufacturers offer a rebate on a piece of equipment that has a relatively substantial useful lifespan, they give up a portion of current profit and cannibalize a future sale for an immediate sale. That is, you are not going to buy a car every year, but when the dealer runs a good sale or rebate, or interest rates are low, you may replace your car sooner than you would have otherwise. Nevertheless, you are almost certainly no longer a potential sale for probably five years afterward. Few people will trade a vehicle they are not even thinking about replacing just because of a $1,000 rebate.

Additionally, just as with CfC, the marginal sales brought to market are anything but “green.” Car dealers are not going to trash perfectly good used cars–which will stay on the road along with the electric cars–but the marginal will wind up being junked a few years earlier than they would have been, which is wasteful rather than a maximum use of resources already consumed. You can’t get much less green than throwing stuff into a landfill when it still has some life left in it.

Stick the word “green” in front of something and it becomes socially acceptable–especially to liberals. Stabenow’s initiative, however, is nothing but a $7,500 per car payoff to several Michigan corporations–read the list of supporters at the bottom of her press release–at the expense of taxpayers around the rest of the country.

After the bust of Cash for Clunkers, one would think our government’s thirst for auto rebates at least temporarily slaked, but “Marge, my friend, I haven’t learned a thing.”

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