Monday, August 4, 2008

Cash for Clunkers

We often think it's better to keep things for as long as possible, but when it come to cars (and appliances and especially refrigerators), that is not always the case. Sometimes it is the wiser environmental choice to scrap it.

Alan S. Binder, an economics professor at Princeton, has come up with a way to stimulate the economy and improve the environment, a program he calls "Cash for Clunkers," which he outlines in a recent NY Times Op-Ed.

"Cash for Clunkers" would be a federal program under which the government would buy up the oldest, most polluting vehicles and scrap them, all while "stimulating the economy, improving the environment and reducing income inequality." Binder explains that the oldest cars pollute far more per mile driven, and quotes a California study which shows that cars 13 years or older account for only 25 percent of miles driven, but 75 percent of car air pollution. Older cars are mostly owned by low-income people and any cash paid would most likely be spent (I'm thinking, probably towards a new car), hence, the economic stimulus part of the package.

Binder proposes that the government post buying prices, perhaps set at a 20 percent premium over Kelley Blue Book prices, for cars and trucks over a certain age. Binder estimates taking 5 of the 75 million clunkers off the road, each year, would cost $20 billion a year, far less than the $168 billion federal stimulus that went into place this past spring. And of course, it comes with the added bonus of reducing air pollution, something we desperately need.

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