Cash For Clunkers Or The F-22?

The Obama Administration has announced that the three billion dollar “Cash for Clunkers” will end on Monday the 24th of August. They are advising dealers to stop writing these kind of deals. The program supposedly burned through the money in less then six weeks. The program initially only had a billion dollars in funding and this went in less then a week. The program had two goals which were first spur car sales in the United States and second by removing older, less fuel efficient cars improve gas consumption and the evironment.

Whether the program has been successful remains up to debate. Many car dealers are angry as they have not been paid promptly by the Government and they have had to front the rebates of either $3,500.00 or $4,500.00 to the customer. In fact the government admitted today that they had only processed about $150 million in claims so far even though they estimate that all $3 billion has been used up. Over the last few days many car dealers and their groups had stopped participating in the program because of the slow rebate process and worries that they would never get paid.

The program also led to sales of foriegn car company cars as well as GM, Chrysler and Ford. The Government felt that they could not limit it to U.S. even though the taxpayer are now majority owners of GM and Chrysler. In fact GM has had to begin sending money to their dealers to make up for the payments from the Government. There have also been criticisms of the environmental side of the program. Estimates exist that the cost per ton of carbon emissions reduced is very high, much higher then other programs that could have been done with the money.

Despite all of these issues the Administration feels that the program has been a success. The economy has been stimulated and cars have been sold. Secretary of Transportation Ray LaHood said that “This program has been a lifeline to the automobile industry, jump-starting a major sector of the economy and putting people back to work“.

In the recent 2010 Defense Budget Obama ended production of the F-22 Raptor advanced fighter. This decision has been criticized from all sides as there is a belief that more are needed then the 187 ordered so far. There has also been criticism that the program helps employ a great deal of people and keeping it going for a few more years will help the economy. Despite all of this Obama threatened to veto the budget bill if funding remained. Congress acquiesced and stripped out the $2 billion for seven more aircraft.

Would $2 billion on these aircraft been a better investment then $2 billion for three hundred thousand or so car sales? That comparison is hard to quantify. The car sales may have occurred over the next few years eventually. Keeping the F-22 in production would have saved down the line a definitive number of jobs that might not be made up with production of new aircraft or systems. The security of the United States would certainly be enhanced as the aircraft could definitely be used even as just attrition replacements. Extending production also might have allowed the foriegn military sales to go through strengthening our ties with Japan, Australia and other interested countries.

Three billion on subsidized car sales or two for more of the most capable and advanced aircraft in the world? Only history will show which was the right decision for the United States.