Cash For Clunkers

The Cash for Clunkers program has exceeded the positive expectations of even its most ardent supporters. Not only did more consumers take advantage of the program than anyone anticipated, but the cars they chose to buy were far more fuel efficient than anticipated. The average fuel economy of a clunker was 15.8 mpg, compared to 25.4 mpg for the car that replaced it—a 61 percent improvement.

In addition, hybrid car sales in July increased by 35 percent, while conventional vehicle sales rose by about 15 percent. Prius sales increased by a whopping 47.5 percent for the month and were up 29.7 percent from July 2008. The July hybrid market share hit 3.55 percent—a record for the United States. The message is clear: Drivers in the United States have wanted fuel-efficient cars for some time, but have been waiting for the right time to buy.

In the Senate, which has been considering an extension of the program since Friday, critics are sitting on their hands and skeptics are turning into supporters. The program’s most virulent enemies like John McCain (R-Ariz.) and Judd Gregg (R-N.H.) are no longer threatening filibuster, and other Republicans like Mel Martinez (R-Fla.) are rumored to be considering joining Senate Democrats in support of it.

On the other side of the aisle, Democrats Dianne Feinstein (D-Calif.) and Chuck Schumer (D-N.Y.) have dropped demands that any extension of the program come with higher fuel economy standards. Feinstein, who as recently as Friday joined together with other environmental advocates in the Senate to insist the program be further studied before it was extended, has issued an unequivocal endorsement of its results. “American consumers are choosing vehicles with much higher fuel efficiency than is required,” she said. “To date, it has proved to be both a stimulus and a fuel efficiency program.”

Feinstein did add some words of caution regarding the source of the $2 billion dollars required to extend the program. The House extension, which passed on Friday, called for the money to be taken from a renewable energy loan guarantee program, a point that bothered many who supported the legislation primarily for its environmental benefits. “We would hope that we could work with our colleagues in the Senate and the House to find another source in the stimulus or to ensure that the funds are repaid,” said Feinstein.