Two economists have analyzed the cash-for-clunkers program and found that its economic costs outweighed its benefits by $1000 per car:
With per vehicle environmental benefits at $596 and the costs at $2,600 per vehicle, the clunker program is a net drain on society of roughly $2,000 per vehicle. Given the approximately 700,000 vehicles in the program, we estimate the total welfare loss to be about $1.4 billion. The welfare loss would be even greater if we fine tuned our estimate of the social cost per gallon to account for the spatial mix of clunkers. Clunkers, especially the trucks that comprise a large percentage of the traded-in vehicles, may have been retired disproportionately from rural locations where the social costs of pollutants are significantly lower. Also, if the average value of clunkers exceeds our conservative figure of $1000, then cost of the program would be higher. Even if the environmental gains were double our estimate, the net drain would still be close to $1 billion. While a more rigorous analysis would no doubt adjust these figures, we doubt that the basic conclusion would change.
(Via the Corner.)
We literally would have been better off if the government had simply burned $1 billion in cash.