White House Attempts to Defame Edmunds.com over Cash for Clunkers Analysis

On October 28, 2009, automotive website Edmunds.com released an analysis on the economic impact of the Cash for Clunkers program. In this analysis, they found that 565,000 of the 690,000 vehicles sold using the Cash for Clunkers rebate would have been sold eventually, regardless of the program—essentially saying that this program had little impact on the long-term financial well-being of the auto industry. Since, technically, only 125,000 cars were sold, each car purchased using the Cash for Clunkers rebate cost taxpayers $24,000—doesn’t sound like a great deal to me.

Of course, the White House could not take this criticism sitting down. One day after the Edmunds.com analysis was released, the White House blog released a vitriolic statement on the supposed “illegitimacy” of the analysis. The title of said blog: “Busy Covering Car Sales on Mars, Edmunds.com Gets It Wrong (Again) on Cash for Clunkers.” In typical White House-fashion, they responded to the Edmunds.com analysis with juvenile insults rather than corroborating their previous statements on the success of Cash for Clunkers. The author of this particular blog post stated that the Edmunds.com analysis was “designed to grab headlines and get coverage on cable TV.” Sounds to me like the same hackneyed argument against “conservative alarmism” that is characteristic of the Obama White House.

The author of the White House blog post attempted to legitimize the Obama Administration’s claims of the success of Cash for Clunkers by providing mere anecdotes, sans facts. One of the author’s main arguments was that Cash for Clunkers made people go out and buy cars even if their “clunker” didn’t qualify for the rebate and that Edmunds.com is wrong for thinking otherwise. He stated that “the country was caught up in the excitement of the Cash for Clunkers program” which ultimately drew them to the car dealerships to buy a new car even if they didn’t have one to trade in. Quite frankly, this is a ridiculous assumption. How the author came to this conclusion is an absolute mystery.

Another main point of the White House blog post is that automakers increased their production throughout the end of the year which would, in turn, increase growth past the 3rd quarter—thus, the author believes that Cash for Clunkers greatly helped the economy, almost single-handedly. Yet, in a statement released by Edmunds.com after the rebuke from the White House, it states: “The economy is recovering accompanied by improved car sales. No manufacturer increases production—a decision with long-term consequences—based on the 30-day sales blip triggered by an event like Cash for Clunkers.” Essentially, they are saying that it is impossible for a short-term program such as Cash for Clunkers to have helped the economy to the magnitude that the government has previously insinuated (especially upon viewing the drop in car sales that came in post-Clunker September). The analysts from Edmunds.com said that they believe that the auto industry is slowly improving by itself because of slightly increased growth in October—this growth would have been even greater, though, without Cash for Clunkers. Thus, Cash for Clunkers was really only a short-term boost for the auto industry—while harming the industry and the US economy in the long-term.

Throughout the White House blog, the author constantly applauds the Cash for Clunkers analysis done by none other than Obama’s Council of Economic Advisors (CEA). He stated that the Edmunds.com analysis is not in line with “mainstream analyses” of the program, such as that from the CEA. Taking a line out of the CEA Cash for Clunkers analysis, the author stated that the most important impact that Cash for Clunkers will have on the economy is that of job creation. The CEA analysis said that “Cash for Clunkers will create 70,000 jobs in the second half of 2009.” Where exactly are these jobs they speak of? I find it slightly ironic that these are the same people who calculated the massive job creation as a result of the “stimulus” package.

Way to go, White House—you have only further delegitimized yourself.

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