The Economy Today: When Government Programs Go Clunk

Economic headlines from Texas, Nevada, and elsewhere

With the House in recess and GatesGate fading into the rearview mirror, the uncertain future of the federal government’s “Cash for Clunkers” program is the story of the day. The New York Times leads with news that while it’s unclear whether the Senate will agree to another $2 billion in funding to keep the program going, the efficiency gains realized from the turnover in the nation’s vehicle fleet have been greater than expected. Dealers are happy, too, having sold an estimated quarter-million cars with help from the incentives; Ford, whose fuel-efficient Focus is the most popular car among buyers using the incentive, seems to be the biggest beneficiary.

The other major papers, meanwhile, offer slightly different perspectives on the program. The Los Angeles Times quotes an analyst who suspects the “Clunkers” program created only about 50,000 additional sales. The Wall Street Journal reports that the program has been an unexpected boon for chemical dealers who sell sodium silicate, the use of which is the only government-authorized way to scrap old vehicles traded in under the program. And an op-ed in The Washington Post argues that it might be greener to keep that clunker, after all, because of the energy required to produce new cars and destroy old ones.

In other news, both the Post and Times offer features on the human costs of the recession. The Post
to blue-collar Middlebury, Ind., finding a subject whose “primary objective” in better times was “to earn enough to cover the rent, eat an occasional steak, feed and clothe their children, ride his dirt bike, fish, golf, play poker, buy lottery tickets, and drink Bud Light,” and who now finds jobs scarce even as unemployment benefits are running out. The Times, meanwhile, relays research findings that many workers who are laid off never return to their peak earning levels.

The Seattle Times is one of many papers to run an Associated Press story reporting that federal tax revenues are taking a beating because of the recession. “Tax receipts are on pace to decline 18 percent this year, the biggest single-year decline since the Great Depression, while the federal deficit balloons to a record $1.8 trillion,” according to the story.

And in stimulus coverage, a general pattern—local papers spotlighting administrative headaches, national outlets taking a sunnier view of the big picture—holds today. In Nevada, the Las Vegas Sun reports that legislative jockeying is holding up the distribution of $10 million in federal funds for weatherization, while the Nevada Appeal reports that state officials are haggling over how much authority to give to a new “stimulus czar.” And in Texas, The Dallas Morning News finds that
“for a number of communities, putting the money into action quickly and efficiently has proven challenging.” But a new Bloomberg story notes that the latest manufacturing statistics are better than expected, and attributes the relatively good news to government intervention: “Manufacturing in the U.S. shrank less than forecast as stimulus-induced gains in demand worldwide helped resuscitate factories from the worst slump in three decades.”

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Greg Marx is an associate editor at CJR. Follow him on Twitter @gregamarx.