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Tuesday, Feb 7, 2023

Cash for Clunkers Could Be a Driving Force

There’s lots that’s interesting about the Cash for Clunkers program. It could be the prototype for a new New Deal for America. In case you are truly uninformed, the Cash for Clunkers program is a federal government stimulus program in which car buyers get a $3,500 or $4,500 rebate when they trade in gas guzzlers for more fuel efficient vehicles. It’s stimulating the auto industry and is designed to rid the world of un-green cars. On its face, this program seems gimmicky and actually kind of silly just throwing money at something to get some action. Sort of throwing it against the wall and seeing if it sticks. It’s ridiculously simple. Sort of cause and effect. But it has had an effect. A few billion bucks thrown at a particular industry has doubled sales for that industry over a short period of time. Some car dealers, who have been inundated with inventory in recent months, don’t have enough cars now because of the program. It’s supposed to end around Labor Day when the additional $2 billion that was appropriated by Congress for the program runs out. Then what? Who cares? Americans got a taste of buying cars again. And they may continue to buy them even after the program ends. They’re obviously not completely broke or they wouldn’t have bought these cars during the Cash for Clunkers program. It was only a few thousand bucks in rebates given to each customer. So there is money out there to buy cars. Maybe the people who didn’t buy cars under the program but still went to the dealers will go back and buy a cheap car a few months from now. So this is where it can be another New Deal for America. While people are thinking about buying cars again why don’t we do other programs like Cash for Clunkers for other industries. How about retail? This also can be a very simple program. Give people rebates for buying a certain amount of merchandise from retailers of all kinds. If it only takes a few billion dollars to stimulate the auto industry, it’ll take a lot less to stimulate some small businesses. Look at all the gazillions of dollars the federal government spends on frivolous stuff. Can’t they throw a little money to small businesses? How about restaurants? Give rebate coupons and we’ll go out to dinner three times a week instead of the once a month we have been doing in this recession. Once again, only a few billion bucks to stimulate growth in one particular industry. After the coupons run out, we may realize that we really like that restaurant down the street and we’ll go back because it’s really not that expensive. And, even if it is, it’s really tasty and we really should treat ourselves occasionally. Crazy thinking? Maybe. But what is needed during this recession are ideas and action. As my columnist colleague Rickey Gelb talks about on page 38 in the Business Journal, a lot of this economic downturn is based on perception. People may think they can’t buy. But they really can even if it’s just a little. One way out of this recession is to hack away at things, little by little. Business Journal Editor Jason Schaff can be reached at (818) 316-3125 or at editor@sfvbj.com .

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