Study: 'Cash for Clunkers' clunked

A study released on Wednesday found that President Obama's Cash for Clunkers rebate system for old cars was an ineffective stimulus program.  

The study, conducted by the Brookings Institution, found that the $2.85 billion Cash for Clunkers program only created 0.7 jobs for each million dollars the federal government spent.

The ratio translated to a rate of $1.4 million for each job, which the authors of the study said was a very expensive stimulus. 

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The program, which was officially known as the Car Allowance Rebate System (CARS), was designed to stimulate auto sales by giving people who drove older vehicles incentives to trade them in for newer, more fuel-efficient models.

Backers of the clunkers program hoped that the rebates would reduce pollution on U.S. roadways and boost auto sales, creating jobs and helping the economy. But the Brookings Institute found that gasoline usage was only reduced by two to eight days worth of consumption.

The Cash for Clunkers program was an early stimulus program of the Obama administration. The program was launched in July 2009, less than a year after federal government offered bailouts to two of the three major U.S. auto companies.

The Brookings Institution study found that 678,000 cars were traded in during the Clunkers program, with customers receiving an average $4,200 rebate for their new auto purchases.

The largest number of vehicles that were traded in, 451,000, were trucks, while the highest number of new models that were purchased were cars, with 404,000 new automobiles purchased using rebates.

The full Brookings Institution "Cash for Clunkers" report can be read here.