“Cash for Clunkers” proves a lemon
There is abundant evidence that government “stimulus” programs hurt the economy more than they help. The auto industry is getting a taste of that right now. The “Cash for Clunkers” program accelerated sales for a while, but since then car sales have crashed.
But that describes only the damage to the auto business. Think about all the goods that weren’t bought or the investments that weren’t made because the government diverted all that cash into a one-time spending spree.
Now two economists have put a price tag on the damage. A new study by Burton A. Abrams and George R. Parsons, both of the University of Delaware, found that the economic damage from the program exceeded the benefit by $2000 per car!
So instead of helping the economy, the “Cash for Clunkers” program made the situation even worse.
