Cash for Clunkers.

Currently 62 million cars on the road, how many are clunkers? No clue.

Cash for clunkers $1B, paying $3,500 to $4,500 each. Let’s split the difference and call the average payout $4,000 (makes the math easier too!). That works out to 250,000 clunkers.

What’s the overhead? How much of the $1B is actually going out the door to buy clunkers. Let’s be generous and keep the math simple, 20% over head (I’d bet it’s closer to 50%), leaves $800M to buy clunkers, or 200,000 cars.

So the $1B clash for clunkers will remove a whopping 0.32% of the cars from the road. An additional $2B for a total of $3B gets 0.96% of the cars off the road.

Each of those cars removed is replace by a new one. So the actual net of cars on the road doesn’t change.

A quick high level summary of emission. Let’s make some quick broad assumption. 1) the 1% (rounding up) of cars removed contribute 5% total auto emissions (WAG). 2) The cars have 80% less emissions. So for 3 billion we reduce auto emission by a grand total of 4%.

CAFE Standard is 27.5, and clunker is 19mpg (IIRC). In 2005 the US average mpg was 21 mpg. Converting a mere 1% of the total US vehicle fleet to 27.5 mpg CAFE standard is going to have a negligible effect. 19mpg to 27.5mpg, approximately 50% improvement, but applied to 1% of the fleet nets a 0.50% improvement for the total average. If we use a better case, 14mpg cars to 27.5 cars on average for a 100% increase the net’s 1% across the fleet.

The average 21mpg jumps to 21.21mpg all for $3,000,000,000.00.

For $12 Billion dollars we can get to 22mpg.