Report: U.S. Cash-for-Clunkers Wasn’t Cost Effective

America's federal cash-for-clunkers program in 2009 cost nearly $2.9 billion, prompted consumers to trade in 678,000 inefficient old vehicles and boosted car sales by a net 370,000 units, according to an analysis by the Brookings Institute.

But the study says a program produced only small and short-lived effects on production, gross domestic product and job creation.

The government program was intended as a temporary economic stimulus. Brookings the incentives simply pulled ahead vehicle sales that would have occurred later anyway.

The analysis also concludes that the cost per job created about $1.4 million was many times the price of other options, such as reducing payroll taxes, providing an extra Social Security payment or hiking aid to unemployed workers.

The Brookings report agrees that the government trade-in scheme did reduce carbon dioxide emissions by swapping old cars with new ones that were roughly 60% more fuel efficient. But it says the cost per ton of CO₂ reduced was not cost effective though better than tax credits for ethanol fuel or rebates on electric vehicles.