Where the cash in ‘cash for clunkers’ went

Printer-friendly versionSend to friendSince the “cash for clunkers” program whipped through auto dealers this summer, the debate about it has raged. Depending on whom you talk with, it was one of the most successful government stimulus programs in history, or it was a $3 billion boondoggle that ultimately had little impact. “Success” is a hard thing to judge, but when you look at where the money went in Patchwork Nation, one thing seems clear: The program benefited the wealthy the most and arguably did little for poorer, struggling communities. Using data from the federal government, we looked at where the nearly 700,000 cash-for-clunkers transactions took place and found that three community types in particular cashed in: the largely suburban “Monied ’Burbs,” the growing and diversifying “Boom Towns,” and the collegiate “Campus and Careers” counties. These three types all have higher-than-average median household incomes, and in general, they’ve fared better during the recent economic challenges, according to our Economic Hardship Index. apatchwork15_g1_l.gif Meanwhile, the places that have gone through some of the toughest times – the socially conservative “Evangelical Epicenters” and the “Minority Central” counties, which have large African-American populations – saw much smaller benefits. Where the money went The idea behind the Car Allowance Rebate System (its official title) was straightforward. Consumers could trade in older, less fuel-efficient vehicles and receive a credit of either $3,500 or $4,500 toward the purchase of a new, more fuel-efficient vehicle. But the credit was only for new vehicles. That fact, without question, played a role in how the money was spread around Patchwork Nation’s community types. People in the “Monied ’Burbs,” “Boom Towns,” and “Campus and Careers” communities simply have more money to spend, even in a recession. A new car isn’t out of the question for many residents in these places. As a result, $146 million in cash-for-clunkers money went to the “Campus and Careers” counties. That comes to $11.71 per person. In the “Monied ’Burbs,” the figures were $798 million and $11.60 per person. The “Boom Towns” totaled $614 million, or $10.09 per person. On the other hand, if you have a lower income, it may be that $4,500 isn’t enough to push you to buy a new vehicle. That appeared to be true in the “Minority Central” counties and the “Evangelical Epicenters”: Less than $100 million went to each of these community types, and that translates to less than $6.50 per capita in each type. Rural, agricultural “Tractor Country” communities, which have ridden out the recession fairly well, seemed to take a pass on the program. Only tiny amounts of clunker money found its way there: about $7 million total, or $3.60 per person. As we’ve noted before, these communities tend to be more careful with expenditures that might be seen as unnecessary. Also, as much as some people like green vehicles, a Honda Civic may have less utility for farmers when it comes to, say, towing capacity. (This analysis is based on the money that dealers took in. But it’s possible that customers crossed county lines and thus community types to buy cars – particularly in rural locales, where dealers can be scarcer. For this analysis, however, we assumed that most car purchases are local.) Larger impacts Critics of cash for clunkers have argued that the program’s focus on new cars – aimed at spurring auto production – hurt the poor. Our community breakdown suggests that this may well be true. But one argument for the program, in terms of stimulus anyway, is that it could focus on places that have a big impact on the US economy. The “ ’Burbs” and the “Boom Towns,” populous and wealthy, tend to drive consumer spending in the United States. Giving these places money could in fact give a boost to the larger economy. Under this reasoning, the money would essentially “trickle down” to everyone else. But the money that trickles down from the “Monied ’Burbs” will probably first trickle to the poor people in the immediate area: They’d benefit from the wealthy having more disposable income in the community. The people living in the other locales may be waiting awhile for their share.

Comments

[...] Chinni, project

[...] Chinni, project director for the Knight-funded Patchwork Nation, released a report showing which groups got the cash in the government's 'cash for clunkers’ program. Based on [...]

Where did the money go? It

Where did the money go? It went to your local dealer who retained about 1% as net profit. The remainder was paid to employees, suppliers, newspapers etc. and went circulating into the economy with everyone getting a share eventually. What all of you are missing though is that for every $4000 or so the government put in, the average individual put in $21,000 creating a That's a 5 to 1 ratio. So you take the same 3 billion and share it equally with 3 hundred million Americans that comes to $10 each and a 3 billion dollar bump to the economy. The cash for clunkers program created 750 sales at 25000 each - a nearly 19 billion dollar bump in the economy. In addition, the people that we sold new cars and trucks to were customers that we would not have seen under other circumstances. 99.9 of these people were fiscally conservative middle class folks who keep their cars until they are worn out and then normally buy used cars. This was PLUS business and it got America's most frugal customers to part with some of their money which the economy seriously needed. A.G. Budd President Country Chevrolet, Inc. Warrenton, VA

[...] Chinni, project

[...] Chinni, project director for the Knight-funded Patchwork Nation, released a report showing which groups got the cash in the government’s ’cash for clunkers’ [...]

[...] Source: Patchwork

[...] Source: Patchwork Nation blog [...]

Thanks J.... That's the

Thanks J.... That's the actual number. It's the per capita figure I am talking about in the piece, which is actually a more accurate measure.

This article ignores the

This article ignores the other goal. Getting rid of gas guzzling clunkers. Oh..check the chart again please. You mention campus and career zones in paragragh3. You probably should have put Industrial Metropolis there, it is like 5 times higher.

Cash for Clunkers did nothing

Cash for Clunkers did nothing to help the car makers, economy or the environment. It just hurt car donations to charities.

[...] the report: People in

[...] the report: People in the “Monied ’Burbs,” “Boom Towns,” and “Campus and Careers” communities [...]

[...] Patchwork Nation:

[...] Patchwork Nation: American communities in a time of change. > Patchwork Nation Blog | The Christi... patchworknation.csmonitor.com/csmstaff/2009/1216/where-the-cash-in-%E2%80%98cash-for-clunkers%E2%80%99-went