Transportation Orientation

Transportation Secretary Ray LaHood announced on Thursday that the Car Allowance Rebate System. popularly known as the "cash for clunkers" program, will end tomorrow at 8:00 P.M. Eastern Time, in recognition of the $3 billion allotted for it about to run out. This will give dealers time to finalize the paperwork on deals handled so far, and announcing the end of the program four days in advance has allowed those interested in getting a $4500 government rebate for a more fuel-efficient vehicle to get in on it before the program ends.

The program has proven to be wildly successful, getting several old gas guzzlers off the road, resulting in a 60% increase in the fuel efficiency of the American private vehicle fleet, and it gave a big boost to automakers hurt by the recession. However, all has not been perfect - the bureaucratic red tape means that some dealers will have to wait awhile to get their money from the government.

And although it's gotten more people into a Ford Focus and out of a Ford Explorer, it's not enough. The next thing the Obama administration has to do is work toward more public transportation - not just modernized intercity rail (which is slowly getting traction; witness my blog entry on Bobby Jindal from late last week), but on commuter rail, streetcars, light rail with exclusive rights of way, and city buses, not to mention more transit-oriented development and retrofitting as much urban sprawl as possible to a transit-based transportation network. It won't be easy, but it could provide more jobs and boost the economy.

We can start with public buildings. Government rules dictate that post offices, for example, have to be built to accommodate cars without any meaningful requirements, if any, for pedestrian access. This is how the post office in my hometown was built; dedicated in 1975, the West Caldwell, New Jersey post office sits on the outskirts of town, off a county highway, with no sidewalk access and plenty of parking. (By contrast, the post office in neighboring Caldwell, built in 1934, is in walking distance of my house - ironic, you'll agree, since I don't live in Caldwell - and there's only parking for three vehicles on the street, with a fifteen-minute restriction.) Oregon House member Earl Blumenauer, a Democrat representing transit-friendly Portland, has sought to get these federal rules repealed, without success so far.

Nevertheless, I wouldn't mind seeing the cash-for-clunkers program continue a bit longer, and I say this as someone who's not in the market for a new car at this time.

Turnaround?

Automobile sales have suddenly been spiking upward, thanks to the cash-for-clunkers program set up by the federal government. Sales for July were up to 11.2 million vehicles, and General Motors and Chrysler checked their declines in year-over-years sales drops (in this case, July 2009 compared to July 2008), coming it at 9.4 percent less and 19 percent less, respectively. Ford, meanwhile, sold 2.4 percent more cars last month in than July 2008, and its sales have steadily risen thanks to the goodwill it's earned from not taking federal bailout money.

So why is the Car Allowance Rebate System, also known as the cash-for-clunkers program, still in trouble?

With the popular program running out of money, the House of Representatives passed a $2 billion infusion for the program, but the Senate is slower to act. Republicans have expressed skepticism over subsidizing car sales with $4500 credits effectively giving consumers free taxpayer money, while some Democrats have wondered allowed if the environmental gains have been substantial. True, many small cars have been bought under the program, and SUVs account for many of the scrapped vehicles. Indeed, the compact Ford Focus is the bestselling car under the program. But there have been anecdotal stories of buyers trading in their old pickup trucks for new pickup trucks of the same size and/or class, because the fuel economy ratings of the newer vehicles are marginally better.

As noted earlier, Senator Dianne Feinstein (D-CA) thought the fuel economy rules in the program didn't go far enough, and Senator Susan Collins (R-ME) agreed with her. Both senators have since announced that they will support the extension in the Senate, regardless of earlier concerns, because they believe it's done more good than harm.

"The good news is apparently people are buying more cost efficient vehicles. The best solution is to continue and extend the program as it is," Feinstein said.

But as long as chuckleheads like Senator Jim DeMint (R-SC) stand in the way, complaining that the government is getting in the used car business (well, the government lies and cheats, so it would have the experience for selling used cars, even though they're only buying them and having them taken out of service in this program), Senate action isn't a fait accompli just yet.

Clunker Program

Leave it to Americans to take a good idea from someone else and screw it up royally. After the practice of government incentives to get motorists to trade in their old cars for new ones to boost economic activity worked so well in Germany, the U.S. government tried the same approach here. It was also designed to incentivize sales of more fuel-efficient cars.

Four days into the program, known as the Car Allowance Rebate System, it's been suspended. It worked too well; 22,782 trade-ins have taken place since Monday, but dealers may have arranged for more sales than the government was prepared for, and the $950 million allotted to the program to pay dealers for disabling the traded-in vehicles was practically exhausted by last night.

Plus, a lot of the paperwork has proven to be illegible.

Another $4 billion may be needed to cover all of the deals that are made, but Democratic Senator Dianne Feinstein of California has blocked further funding in an effort to boost the fuel economy requirements. Because fuel economy improvements are not a big concern in Germany, where gas is expensive and cars are already pretty small, the Germans don't have such a problem, at least not on a huge scale.

So once again, Americans are proven to be no better at something than they are at providing quality public education, building high-speed passenger railways, or establishing public medical insurance, all of which the Germans - and others - are very good at.

Irony of ironies: A GMC ad encouraging people to buy GMC vehicles - all light trucks, none of them really all that fuel-efficient - through the Car Allowance Rebate System appeared on the opposite page of my local paper as the article about the program's collapse.