The Corner

Austan Goolsbee Flunks ‘Cash for Clunkers’

Austan Goolsbee recognizes that there is a lot he doesn’t know. Yet this lack of knowledge doesn’t stop him — and many others — from making policy recommendations and pushing for spending programs that will cost taxpayers billions. Take Cash for Clunkers, for instance. Politico reports:

Former Obama administration economic adviser Austan Goolsbee said Thursday that if given a second chance he would not have backed the Cash for Clunkers program or the home buyer tax credit passed in 2009 to stave off further economic distress.

“Because we didn’t know if [economic recovery was] going to be short or long,” the Obama administration tried measures to address both scenarios, Goolsbee explained on MSNBC’s “Morning Joe.”

Yep, he didn’t know. However, it’s not as if there weren’t a lot of people who predicted that it wouldn’t work. The result was a cost to taxpayers of $24,000 per car sold. Edmunds.com did the math:

Edmunds.com, the premier resource for online automotive information, has determined that Cash for Clunkers cost taxpayers $24,000 per vehicle sold.

Nearly 690,000 vehicles were sold during the Cash for Clunkers program, officially known as CARS, but Edmunds.com analysts calculated that only 125,000 of the sales were incremental. The rest of the sales would have happened anyway, regardless of the existence of the program.

Ironically, the average transaction price for a new vehicle in August 2009 was only $26,915 minus an average cash rebate of $1,667.

So I wouldn’t give Goolsbee a second chance, especially considering the other policies (such as ARRA) he pushed for during his time in government that failed to deliver on the promises made to taxpayers.

Ideally, evidence like this should prevent lawmakers from going down that road in the future. But I won’t be holding my breath. Instead, I will post this hilarious and yet wise video by my colleague Rob Raffety that predicted that Cash for Clunkers would be a total scam:

Lawmakers, please take notice.

Thanks to Matt Welch for the pointer.

Veronique de Rugy is a senior research fellow at the Mercatus Center at George Mason University.

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