Originally, the Cash for Clunkers, or Car Allowance Rebate System (CARS), program was supposed to provide economic incentives for people to trade in their old fuel inefficient cars, for a $3500-$4500 discount on anew more fuel efficient cars, while simultaneously trying to boost the car industry. As we all know, America is very behind in the car industry, with some of the biggest names declaring bankruptcy this summer: Chrysler and General Motors. Although this program is viewed as a success, the facts tell a different story.

Because of the CARS program, our government paid $3 billion to car dealerships, but instead of the profits going to the American car companies, most of it went to the foreign companies. The program caused car sales to surge 2-3%, but these results do not tell the whole story. Of this increase in sales, some of the consumers were already going to buy a car in that period, and others bought earlier then they otherwise would have. Cars are a good that does not need to be replaced very frequently, so the 42,000 jobs that the program created will not be sustained. Furthermore, of the cars that were bought, the top three sellers (Toyota Corolla, Honda Civic, Toyota Camry) were all foreign! A large sum of the profits that the program was generating did not even go towards improving the U.S. economy. If the American car companies like GM and Chrysler aren’t among the most sought after cars, why are we bailing them out, let alone buying these cars back?

Along with pumping the taxpayer’s money out of the American economy and into foreign economies, the CARS program was very poorly planned. Legislators had planned that the program would only cost $1 billion dollars, and would last around 5 months. Within the first week, the applications for the program had exceeded $1 billion so Congress approved another $2 billion, which was still exhausted 2 months before planned. This plan encouraged people, in the midst of a recession, to spend money they didn’t have to begin with to buy new cars. Many of the consumers of the program financed these just incurred much more debt, on an investment that is depreciated greatly from the moment it is driven off the lot.

On the other hand, the average mpg from the cars that was turned in was 16 mpg, and the average mpg of the sold cars was 26 mpg, so it did have some positive outcomes. President Obama and Congress both deemed the CARS program a success, but was it really?

Bottom line: Is the government spending our money wisely?