'Cash for Clunkers' Bill a Clunker after All
The law was meant to promote smaller, more fuel efficient cars by subsidizing dealers to buy back gas guzzlers so that drivers could buy environmentally friendly cars. It fails in practice, according to the July 13 & 20, 2009 issue of the magazine, and may even do the exact opposite of its purpose.
“The problem with the law is that it is both underfunded and too narrow to generate a spike in showroom traffic,” David Welch wrote in the July 13&20 edition of Business Week, “Plus, the law makes little sense for most passenger-car owners.”
That’s not how ABC’s “World News Sunday” portrayed the idea on June 14, before the bill even passed. The network compared it to a similar law in Texas, one that according to David Muir “has been a smashing success.”
“Advocates say it will clean up the environment and help the struggling auto industry,” Ryan Owens reported as he interviewed proponents of the plan. He didn’t interview anyone opposed to the bill.
The only people he credited with disagreeing with the bill were mechanics or repair shop owners, who profit off of old cars, and environmentalists, who see the bill as too weak. Nowhere did he mention any of the bill’s shortcomings.
According to Business Week, however, there were plenty. Welch explained that most cars do not qualify for the program because of the miles per gallon they get, and those that do qualify are worth more than the government is subsidizing dealers: “If a consumer can sell the old car for more than what the government will pay, there’s no reason to take advantage of the bill, says [John] Wolkonowicz.”
NBC Nightly News gave the law positive coverage July 8 when anchor Brian Williams led into the segment using a pro-environment introduction. “We like to say that all fuel efficient cars are better to own because they save you money on gas in the long run and they're kinder to the environment. What no one ever mentions is not having the money to buy a new car. Well, the federal government has a program out, sounds like a late-night cable TV come-on, it's been called cash for clunkers and it’s real...”
The segment featured plenty of praise for the program. “In the environment we’re in right now, a program like this is heaven sent,” Benny Dominguez from AutoNation stated. “People are really excited about it because it seems like found money to the consumers,” Chip Snyder from Maroone Chevrolet gushed.
Only one person was featured disagreeing with the law and that was from the left. His reasons were because he felt the law, which was supposed to help the environment, really only benefited car dealers.
CBS Evening News also assumed the law’s success on July 1 when Anthony Mason reported, “Auto sales are also expected to get a boost when the government’s ‘cash for clunkers’ plan kicks in later this month, offering cash incentives to car buyers who turn in old gas guzzlers.”
Reuters joined in the praise on July 9. Tim Gaynor reported, “It has been broadly welcomed by auto dealers across the country.”
Gaynor attempted to strengthen his argument by quoting Scott Gruwell, sales director of Courtesy Chevrolet: “‘It's a wonderful program. It helps out the environment, it helps out the customer, and it gives a jump to the automobile industry when it needs it the most,’”
The article then quoted Phil Reed, senior consumer advice editor at Edmunds.com: “‘If you need a car, or are close to needing a car ... This is shaping up to be a good time to do it,’” while at the same time recognizing that the details of the plan will not be finalized until the end of July.
The only opposition to the law that Gaynor recognized was by a veteran sales manager at a dealership in Los Angeles, Mark Near, who acknowledged that only a select group will qualify for the program. However, Near also praised the bill, since, “simply getting potential customers through the door is a plus in itself in difficult times.”
On the other side of the story, Welch remarked that, “People driving cars that ancient often buy used, and even with a $4,500 discount, they probably won’t want to take on new-car payments during a time of economic hardship.”
Despite this, CBS financial contributor Ray Martin praised the law on the June 25 Early Show: “you can get up to forty-five hundred dollars for it even if it’s only worth a hundred dollars, even if it’s worth nothing.” Following Martin’s lead, Harry Smith both praised this law, saying “it’s great for the auto industry,” and gushing over the “green part of this.”
The law may not be as green as supporters think. “Paradoxically, the bill may help the Big Three sell more gas-guzzling pickups,” Welch pointed out as he explained. “The government only requires that a consumer buy a new pickup that gets 18 mpg or better or a heavy-duty work truck that gets 15 mpg or more-hardly the kind of performance that will help wean America off foreign oil.”