Clunkers again

Posted at 1:15 PM on March 1, 2010 by Bob Collins (0 Comments)

The Cash for Clunkers program, when the government paid money to people who were well enough off to take on new-car payments, didn't do that much for the economy, but that's not stopping a similar program in states to get people to buy appliances.

Business Insider's The Money Game notes:

Of course, the original cash for clunkers program also had perverse effects. Increased auto-spending seems to have hurt other market sectors that weren't subsidized. One of the hardest businesses was home appliances. So the need for a Cash For Frig program was partially created by the cash for clunkers program. And now increased spending on appliances by cash strapped consumers could wind up socking it to non-subsidized businesses. It's cash for clunkers all the way down.

So, today, the Cash for Appliances program started, which -- if we follow The Money Game's analysis -- was needed to offset the negative effects of the car-buying program. Doesn't that make you wonder what we'll need to fix that gets depressed by the appliances, program?

No? Then you're probably one of the people in the market for some appliances who crashed the rebate sites in Iowa and Minnesota earlier today.

Last week, Sears jumped in early, e-mailing notices to Minnesota customers that now's the time to buy.

But the fine print reveals a flaw in the theory that these programs do that much for the economy. The store combined the rebate with sales on appliances.

But the sale prices didn't include Electrolux, an appliance company that still employs people here. Electrolux still has about 1,200 people employed in the state, but much of its manufacturing work -- like other major appliance makers -- has been moved overseas.

Defenders of the program say it's true benefit will be to eliminate some energy-hogging appliances. Defenders of the car-buying program said the same thing, until an analysis showed there was little true energy savings achieved.

So let's renew the debate that started last year with the cars: Should taxpayer money be used so people can buy a new dishwasher? And if you're spending money on a big appliance, what aren't you spending money on that you otherwise might?

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