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Networks Praise 'Clunker' Program, Downplay Critics

In stories that cited experts, proponents outnumbered critics nearly three times as often. Sixty percent of the outside voices featured in network morning and evening show reports were supportive of the program, compared to 40 percent who were critical.

Reporters lauded the program calling it: “wildly popular,” “too successful,” and a “victim of its own success.” CNBC’s Jim Cramer even said “it’s stimulating the economy for real,” on Aug. 3. As the bill was being passed, network journalists portrayed the program as a measure to “boost auto sales” and the economy and to “clean up the environment,” but critics now say it is unclear whether either of those claims is true. Even some environmentalists are critical of the scheme.

Since when is a federal program that blows its entire 14-week budget in one week deemed “successful” by the news media? When it’s “Cash for Clunkers.”

The $1 billion program to offer vouchers of up to $4,500 to new car buyers for trading in “clunkers” for more fuel-efficient vehicles was signed into law by President Barack Obama in June. The government giveaway began on July 27 and was supposed to last until Nov. 1, but burned through the funds in a single week. Now the Senate is deciding whether or not to give $2 billion more.

All three networks used the phrase “victim of its own success,” to describe the program going broke in its first week.

Still, networks heaped praise on the clunker program. CBS “Evening News” anchor Katie Couric teased on Aug. 3, “[S]ales reports out today show the Cash for Clunkers program gave U.S. automakers a much-needed jumpstart.”

But it might not be helping U.S. automakers as much as anticipated. ABC News.com reported Aug. 4 that while the top selling car was the Ford Focus, Toyota and Honda models rounded out the top five. That same day The Associated Press reported that the Obama administration “is refusing to quickly release government records” on the program “that would substantiate – or undercut” claims of the programs success.

Jim Cramer called the potential $2 billion more dollars for the program, “money well-spent,” on NBC’s “Today.”

NBC’s Phil LeBeau announced Aug. 1 that “The popularity of Cash for Clunkers helped GM and Chrysler post smaller-than-expected sales declines in July, while Ford increased monthly sales for the first time in nearly two years.”

In stories citing experts, proponents of Cash for Clunkers outnumbered critics nearly three times as often, in the 37 network stories between July 4 and Aug. 3.

As Congress was passing the Cash for Clunkers bill in June, the networks called it “great for the auto industry” and said it would help “clean up” the environment. Both those claims are now in doubt.

Gwen Ottinger, a program researcher in environmental history and policy at the Chemical Heritage Foundation, wrote in The Washington Post that the program was “not necessarily a boon to the environment.”

Her Aug. 4 article argued that if you want to be green you should “consider keeping your ‘clunker.’”

Jeremy Anwyl, CEO of Edmunds.com (a car buying Web site), said “it’s not clear that cash for clunkers actually increased sales.”

Mismanaged, complicated and overbudget

 

Like so many government programs, Cash for Clunkers turned out to have plenty of flaws, included complicated paperwork, a dysfunctional Web site and confusing rules. The program also quickly ran out of funds and is waiting on Senate approval for a $2 billion infusion of funds to continue.

Some network reports acknowledged the confusion greeting car buyers and dealers “drowning in paperwork.” The Aug. 2 “Good Morning America” mentioned the “big problems.”

ABC’s Rachel Martin said the government Web site for car dealers to process clunker sales kept crashing and “add to that, endless paperwork and confusing rules.”

“Five hours of paperwork for each car” according to ABC’s Sharyn Alfonsi.

Many network reports spun the quickly bankrupted program positively, calling it a “victim of its own success.” ABC’s Bill Weir said, “It seems so successful on one hand and such a disaster on the other.”

But a few weeks before the program took affect, BusinessWeek magazine criticized it saying “it is both underfunded and too narrow to generate a spike in showroom traffic” and even pointed out that $1 billion would only be enough for “not much more than a week’s worth at current sales levels.”

An editorial in the New York Post July 31 said that if people want a “sneak preview” of government-run health care just look at the Cash for Clunkers program. It created great demand, so much so that the government ran out of funds sooner than anticipated.

“But here’s another problem,” The Post said. “The Minneapolis Star Tribune reports that at a meeting this week of 150 Minnesota auto dealers, not one has gotten a single transaction approved by Washington.” That left dealers in limbo, waiting to get through the red tape.

 

Not so green?

Cash for Clunkers was touted as good for the environment because it would get older, less fuel efficient cars off the road and replace them with cleaner vehicles, but that might not turn out to be the case.

According to Edmunds.com, many trucks, SUVs and even the 2009 Hummer H3T are eligible new cars for the program.

The clunkers were also supposed to be disabled “prior to submission,” but according to ABC News the NHTSA changed that rule allowing dealers to hold on to the cars just in case the government money doesn’t come through.

ABC’s Kate Snow noted Aug. 2 that “kind of defeats the purpose of the whole environmental reasoning behind this Cash for Clunkers program, doesn’t it?”

Ottinger’s Post story also explained why “consumption-promoting policies” are not always good for the environment after all. She said that the act of replacing items, such as cars or appliances, carries environmental costs “not accounted for in the stimulus programs.”

“Disposing of old products, a step required by most incentive and rebate programs, also has environmental costs: It takes additional energy to shred and recycle metals; plastic components often cannot be recycled and end up as landfill cover; and the engine fluids, refrigerants and other chemicals essential to operating products end up as hazardous wastes,” said Ottinger.

“Crackpot Economics”

CNBC’s Jim Cramer claimed that the program is “going to put people to work” and stimulate the economy “for real.” But some economists disagree.

This is not good for economic growth,” said Dan Mitchell, a senior fellow in economics at the Cato Institute and Business & Media Institute adviser. “You’re simply getting people to use existing income to spend on cars. Getting people to spend more of their money on cars mean they will have less money to spend on other things.”

A Wall Street Journal op-ed on Aug. 2 called the program “crackpot economics.”

“The subsidy won’t add to net national wealth, since it merely transfers money to one taxpayer’s pocket from someone else’s, and merely pays that taxpayer to destroy a perfectly serviceable asset in return for something he might have bought anyway,” read the op ed.

The Journal’s Real Time Economics blog talked to Douglas Lee of the Washington, D.C. consulting firm Economics. Lee’s data suggested that the program may actually be borrowing from future growth, “speeding up” sales that would have happened later in the year or in early 2010. The end result could increase worries about a double-dip recession.