The party’s over: Obama administration officials have announced that the cash for clunkers program will shut down on Monday at 8 PM (EDT). That’s the deadline to trade in an old gas guzzler in exchange for a rebate of up to $4,500 on a new, more fuel efficient vehicle under the program that legislators initially funded with $1 billion earlier this summer with the expectation that it would last until November 1. Boy, were they off — the shutdown announcement comes just two weeks after Congress tripled the program’s funding to $3 billion in an effort to extend the program at least through Labor Day.
As of Thursday morning, more than 457,000 trade-ins and at least $1.9 billion in rebates had been recorded in the system, according to the Department of Transportation — and there’s more in the pipeline. Auto dealers have complained in recent weeks about backlogs in the system and delayed payments from the government, and the Washington Post reports this morning that less than 40 percent of the applications have been processed so far (a document on the official Car Allowance Rebate System site puts the portion of reviewed applications at closer to 30 percent).
In a release about the planned shutdown late yesterday, Transportation Secretary Ray LaHood said, “It’s been a thrill to be part of the best economic news story in America,” and President Obama called it “successful beyond anybody’s imagination” in his radio address. Not everyone shares that assessment. Some economists have argued that the program isn’t so much stimulating vehicle sales as it is “accelerating and temporarily confining them,” as explained on the Red Green and Blue blog.
Heightened demand stemming from the program has spurred General Motors (s GM), Toyota (s TM) and Ford (s F) to increase production, add shifts and rehire laid off workers, as the DOT notes in its announcement, but with the program now coming to a close, much of that demand — and at least some the jobs that followed — will likely dry up.
From an environmental perspective, legislators set the bar relatively low, providing vouchers for cars getting as little as 22 MPG. Beyond that, the program is a decidedly expensive way to reduce carbon emissions when you consider the cost per ton of greenhouse gases saved with the fuel efficiency improvements resulting from each trade-in. And the extra $2 billion that Congress added last month came out of a loan guarantee program for renewable energy.
In the end, maybe the green legacy of cash for clunkers will be inspiring a more ambitious program: Cash for clunkers worked so well at getting drivers to trade in their old cars, and proved “that Americans will bite if you make it economical enough,” former President Bill Clinton said at the National Clean Energy Summit in Las Vegas last week — why not create a similar incentive program for electric vehicles?