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White House Calls Out Blog for Faulty Analysis

Latest right wing foray, this time against Clunkers, meets with another aggressive response from the Executive branch.

by on Oct.30, 2009

Council of Economic Advisors Seal

"In other words, all the other cars were being sold on Mars."

When a blog site declared that the CARS program, aka Cash For Clunkers, cost taxpayers $24,000 per vehicle sold and only 125,000 of the sales were incremental, it was too much for the newly aggressive Obama Administration to ignore publicly.

In a witty and number filled response that referred to the publicity seeking site and an analysis by the Council of Economic Advisors, the White House blog asked viewers to decide for themselves.

Not before using rapier wit and a decidedly better written blog post, that is – so if you “live by the sword, you die by the sword” was the signal to all the bloggers out there.

The White House said, “On the same day that we found out that motor vehicle output added 1.7% to economic growth in the third quarter – the largest contribution to quarterly growth in over a decade – Edmunds.com has released a faulty analysis suggesting that the Cash for Clunkers program had no meaningful impact on our economy or on overall auto sales. This is the latest of several critical ‘analyses’ of the Cash for Clunkers program from Edmunds.com, which appear designed to grab headlines and get coverage on cable TV. Like many of their previous attempts, this latest claim doesn’t withstand even basic scrutiny.

“The Edmunds analysis is based on two implausible assumptions:

“1. The Edmunds’ analysis rests on the assumption that the market for cars that didn’t qualify for Cash for Clunkers was completely unaffected by this program. In other words, all the other cars were being sold on Mars, while the rest of the country was caught up in the excitement of the Cash for Clunkers program…

“2. Edmunds also ignores the beneficial impact that the program will have on 4th Quarter GDP because automakers have ramped up their production to rebuild their depleted inventories…

“Most importantly, this program is helping boost our economy and create jobs now when we need it most. In a comprehensive report, the Council of Economic Advisers estimated that the Cash for Clunkers will create 70,000 jobs in the second half of 2009. The strength of recent auto sales data suggest that, if anything, this projection underestimates the actual impact of the program. CEA’s analysis is transparent and comprehensive, laying out all of its assumptions for the public to understand. Edmunds.com, on the other hand, is promoting a bombastic press release without any public access to their underlying analysis.

“So put on your space suit and compare the two approaches yourself,” the White House concluded.

Edmunds is apparently able to communicate from Mars.

In a statement, it said:

“This analysis is valuable for two reasons,” explained Edmunds.com CEO Jeremy Anwyl. “First, it can form the basis for a complete assessment of the program’s impact and costs. Second—and more important—it can help us to understand the true state of auto sales and the economy. For example, October sales are up, but without Cash for Clunkers, sales would have been even better. This suggests that the industry’s recovery is gaining momentum.”

As this item is posted, Anwyl is about to appear on – where else – Fox News, which is also held in the same esteem by the White House as Edmunds apparently is.

Stay tuned for more media covering media covering media.

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6 Responses to “White House Calls Out Blog for Faulty Analysis”

  1. Ian Beavis says:

    I have seen several different analyses of cash for clunkers but only the Edmunds one smells of politics.

    • Ken Zino says:

      Ian: We’ll take a look at the October sales numbers, but the Edmunds’ analysis appears weak, at best, to be polite.

  2. Ken Zino says:

    Transportation Secretary Ray LaHood, a Republican, on Clunkers from his blog:

    “On Clunkers debate, one point we can all agree on

    “A big “Thank you” to the White House blog team for a witty and perceptive account of Cash for Clunkers’ real contribution to our economic recovery.

    “If you haven’t read about the brush-up prompting that White House response, it began with a report from Edmunds.com that minimized the impact of Cash for Clunkers.

    “You don’t have to look too far beyond Edmunds to find loads of support for a positive analysis of this successful program:

    * Ford Motor Co. estimates 30-40% of Cash for Clunkers sales were truly incremental–an increase of 210,000 to 280,000 vehicles, or twice what Edmunds asserts).
    * Moody’s Investors Service estimated 60% of sales were incremental or about 420,000 extra vehicles.
    * Mike Jackson, CEO of AutoNation, told the Detroit News’: “Simply put, they [Edmunds] have misrepresented the facts, and the White House is completely justified in calling them out on it. Edmunds’ political views have tainted their usual rigorous approach to research. We believe that the incremental sales are over 500,000 new vehicles.”

    “But, let’s also not forget about the larger goal of the Cash for Clunkers program: to jump-start this economy. By that measure, the 1.7% of our 3.5% growth this past quarter attributable to the automobile industry reveals that this program has done exactly what was intended.

    “Others agree:

    * George Pipas, sales analyst for Ford: “They [Edmunds] missed the point. The whole purpose of the program was to provide some kind of catalyst to kick-start the economy, and by all accounts the extra production that was added this year was a boost to the economy.”
    * Jared Bernstein, White House economist: “Some sales in Cash for Clunkers were sales that would have occurred later than when they did. That’s okay, especially when you look at today’s GDP report where we are posting positive growth; we really need that growth now. Pulling sales forward is actually helpful.”

    “It’s no secret that I believe Cash for Clunkers was wildly successful. But, I will say that I like the closing suggestion of the response I read on Edmunds.com, and I think it’s well worth sharing:

    “Officials should take heart from the core message of the analysis: the fundamentals of the auto marketplace are improving faster than the current sales numbers suggest.”

    “That’s something I hope we can all agree on, and celebrate.”

  3. MTuzmen says:

    I agree in general with The White House. You have to look closely at the PECUNIARY effects on the economy, which in this case yells out positive.

    Our perception of the clunkers is that they simply guzzled gas, minimized the return on investment made in maintenance done on them, slowed down the traffic and therefore led to excessive consumption of time+money+energy+etc., weren’t offering their drivers much of today’s vehicle safety features.

    Every new car sold in exchange of such a vehicle generated ‘additional’ tax income to the state, to the federal government, sales revenues for the dealer & the manufacturer-i.e. subject to further tax revenues on the federal budget- and helped the auto industry bail-out money being funded by the borrowers at a proportion. The roads got cleared of the junk. More can be said…

    The calculation practiced by Edmunds.com is a little out of my capacity but looks like a good earthly(not for Mars) exercise.

  4. Atl says:

    Bottom line, How many cars sold previous two months ? How many sold following 2 months after CARS avg out surplus were incremental!!!!
    As for me I bought a car earlier than I would have as I wanted to use any money Government whats to give away!!!!!!!!
    Now if they would extend home buyer tax credit to everyone. I’ll buy another house & rent out my house!!!!!!

  5. Ken Zino says:

    ATL: Sales numbers for October will come in next week. Then we can take another look.