quote:Typically 200,000 vehicles worth less than $4,500 are traded in for new vehicles every three months. At best, the current Cash for Clunkers program - officially called the Car Allowance Rebate System (CARS) - will fund 250,000 such transactions in the same time period - a gain of only 50,000 vehicles. Given that this program is budgeted to cost $1 billion, this increase will come at the cost of $20,000 per extra sale.
"The incremental sales will be limited and at a considerable cost. In effect, we are paying consumers to do something most would do anyway," said Anwyl. "So as a stimulus, the program fails.
How they calculated the cost...
250,000 - # cars expected to qualify for the clunker stimulus before funds run out
200,000 - # cars that would be traded in on new cars anyway within same 3 month period
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50,000 - # net (additional) new cars sold
(stimulus budget)/(# net new sales) = taxpayer cost per net new sale (stimulated)
$1,000,000,000/50,000=$20,000 cost per additional vehicle sale program "stimulated."