CNN Reports Car Price Spike Coming Due to 'Success' of Clunkers

What is it about consequences that the liberal media and government simply cannot grasp?

CNN "Newsroom" admitted Aug. 27 that new car prices are "expected" to go up as a result of the government Cash for Clunkers giveaway.

Heidi Collins told viewers, "The success of the Cash for Clunkers program may be pushing new car prices higher. Dealerships are expected to have lower inventory over the next few months, meaning higher prices for consumers. Around 700,000 people took advantage of the Cash for Clunkers program."

Collins' use of the word "success" to describe the program was consistent with the media's advocacy of the program. All three broadcast networks called it a "victim of its own success," after the initial $1 billion in funding ran out after just a week - instead of the 14 weeks projected.

Such positive reporting by the media mostly ignored the potential for price increases after Cash for Clunkers ended. Jeremy Anwyl, CEO of Edmunds.com, the car rating Web site, predicted in a Wall Street Journal op-ed that prices would rise.

"There is also an ironic unintended consequence. Car companies have cut the number of vehicles coming off their assembly lines in response to the recession, which is leading to spot shortages. This is particularly the case for fuel-efficient models the program was suppose to encourage consumers to buy. As prices for these autos rise, buyers will inevitably use their cash-for-clunker dollars to buy less-efficient models and thus crush one of the touted environmental benefits of the program," Anwyl said. (Emphasis added)

Julia A. Seymour
Julia A. Seymour
Julia A. Seymour is the Assistant Managing Editor for the MRC's Business and Media Institute.