The program forced the destruction of 700,000 perfectly functional cars and light trucks.
If each car was roughly worth $3,000 with 700,000 vehicles totals $2.1 billion in wealth was destroyed. It is as if a hurricane came through and completely destroyed 700,000 vehicles.
This limits the supply of used cars available on the market, forcing up existing used car prices. It also limits the supply of parts available on the market, forcing up existing part prices. This mostly affects lower-income drivers will now have to pay more for purchasing a used vehicle and maintaining their used vehicles.
It took roughly 1,100 more federal bureaucrats to manage and execute this program, which means 1,100 fewer workers in the private sector.
All this effort to destroy used cars was paid for by $3 billion authorized through Congress using taxpayer money. This was an indirect transfer of wealth from the average middle class taxpaying citizen to the more affluent, able to afford a new car during a recession, citizens. This program financially punishes the middle class taxpayer who paid for this program through their taxes and will have to pay more to purchase a used car and maintain a used car.
Roughly $2.1 billion in wealth was destroyed while another $3 billion of wealth was redistributed from the middle class to the more affluent.
Cato.org – Cash for Clunkers: Dumbest Program Ever?
Cato.org – There’s No End to Replacing Clunkers
Washington Times – Obama’s protectionist policies hurting low-income Americans