‘Cash for Clunkers’ is over, but effect helps keep economy rolling

In just a short time, the Car Allowance Rebate System (CARS), also known as “Cash for Clunkers,” provided a tremendous boost to our nation’s economy. As families were eager to lower their gas bills, they rushed into showrooms to purchase new, more fuel-efficient vehicles. While traveling to dealerships and meeting with constituents in my home state of Michigan, it was clear that many participants in the program had no plans to buy a new car but the incentives enticed individuals to do so. With the surge in new sales, August turned out to be a great month for America’s car dealers.

For the first time since October 2007, car sales were up — 30 percent. Over 1.3 million cars and light trucks were sold in August, far exceeding expectations. Now car lots across America are nearly empty, a 180-degree turnaround from the situation earlier this year. The program also lifted many other struggling companies in the aluminum, steel, and scrap industries, which have been particularly battered by the economic slowdown.

What is most important, though, is that this shortage of vehicles means more workers are kept on the job. In states like Michigan, Ohio, Indiana and Missouri, the Big Three have all begun ramping up production of automobiles to get inventory back on dealer lots, bringing thousands in the workforce back from layoffs and pouring money back into the economy. When I was working to pass this bill in the Senate, I had hoped it would lead to people being called back to work, and that’s exactly what happened.

Even though Cash for Clunkers is over, the stimulus effect is continuing. The program boosted tax revenues, helping state governments avoid further painful cuts. Advertising is up, helping local newspapers and television and radio stations. Tow truck companies, dismantling shops and recyclers will also see a boost in the coming months as they dispose of the clunkers that were turned in.

Like Cash for Clunkers, programs that aim to modernize our facilities and communities while at the same time making them more environmentally friendly, such as those included in the American Reinvestment and Recovery Act, will be key to helping our economy recover. These programs create jobs locally, and help build pride in the communities that benefit in many ways.

We’ve seen similar success with other demand-based stimulus programs. The first-time homebuyer tax credit has been an extraordinary success, helping to boost pre-owned home sales to a two-year high in July. Manufacturing is also up, at the highest rate since January of last year. In short, when we stimulate demand, we all benefit. A rising tide really does lift all boats.

Similarly, a climate change bill, if written correctly, will have the same potential impact on the Michigan job market, as we create jobs to help modernize and update the way we power our nation. Jobs will be created in manufacturing as we look to ways to improve out nation’s power infrastructure, and also reduce the negative impact to our environment.

Cash for Clunkers wasn’t an easy program to put together. Crafting it required countless hours of negotiation. In the end, it wasn’t everything I wanted — or what many of my colleagues wanted. But we came together, in a bipartisan way, to do something to help some of our industries and Americans who have been hardest hurt. And it worked!

As Congress moves forward with other initiatives, I hope we will continue to work in the same manner to ensure we maximize the positive impact on our economy and most importantly, jobs!

I particularly want to thank Rep. Betty Sutton (D-Ohio) for her leadership in the House and Sen. Sam Brownback (R-Kan.) for partnering with me on the Senate bill. And a big thank-you to all of the Senate and House cosponsors, as well as the Senate and House leadership for their wonderful support.

Stabenow is a member of the Senate Finance Committee.