The "Cash for Clunker" program (officially the "Car Allowance Rebate System Act," or "CARS") has boosted month-to-month auto sales nationally by 2.4%, emptying lots at Dallas car dealerships, and prompting Ford factories in Detroit to do something they haven't done in years: scramble to raise production to catch up with demand.
But even with this welcomed jump in auto sales, the story told by July's retail sales numbers was that not even Cash for Clunkers has been enough to keep retail sales in the black. After making gains in May and June, national retail sales trends reversed in July and fell 0.1%.
Earlier this week, I called on Energy Secretary Dr. Steven Chu to create a Cash for Clunkers program for urban America, one that transforms the Department's appliance rebate program into a mirror-image of the successful program for cars.
I have proposed expanding the CARS model to cover clunker appliances, offering a $300 rebate to consumers who trade in their aging, environmentally unsound refrigerators for replacements that have been federally approved as Energy Star efficient and a sliding rebate scale for other appliances like air conditioners and dishwashers.
For the 77% of Manhattan households (and over half of all city households) who do not have a car, the picture is clear: By limiting the clunkers program to automobiles, urban consumers have been left out of the recovery picture, and the program's impact has been narrowed.
According to the Energy Star website, New York State's average kilowatt-hour electric rate is 64% above the national average, and more expensive than every other state in the nation except for Connecticut Hawaii. Electric rates are even higher in New York City.
Because of these energy costs, the savings to families from upgrading the energy efficiency of their appliances is potentially very large. For example, a household that trades in a 20-year-old refrigerator - by no means a rarity in New York City - will pay Con Ed almost $1200 less in electricity bills over five years, just from that single replacement.
If 5% of New York City households participated in such a program, the $45 million cost of the rebates could generate $180 million dollars for local retailers and would be quickly matched in energy savings.
Of the $32.7 billion made available to the Department of Energy through the American Recovery and Reinvestment Act, only $9 billion has been awarded. The Department of Energy has the expertise, the means and the resources to boost the urban economy. Now, thanks to Cash for Clunkers, we also have the model for how to do it.
Stimulus spending on rebates to spur the trade-in of energy-wasting consumer goods helps to achieve three pressing goals: economic stimulus, reduction of greenhouse-gas emissions, and less strain on family budgets. The replacement of an energy-guzzling old refrigerator succeeds in achieving these objectives just as surely as the replacement of a gas-guzzling car.
Let's bring the success of this program to America's cities and enlist New York's 8 million soldiers in the retail recovery effort. The line starts at your nearest appliance store.
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