Congress passed the Cash for Clunkers program in order to increase automobile employment and save jobs. As Michigan Sen. Debbie Stabenow – a key supporter of the law – put it, “This is a jobs program first.” Cash for Clunkers has done many things. It has given hundreds of thousands of Americans vouchers worth between $3,500 and $4,500. It has encouraged many Americans to trade in old cars now instead of waiting a few years. It has destroyed valuable used cars that dealers would have resold to low-income Americans. It has added $3 billion to the national debt. But the new jobs report shows that Cash for Clunkers has not done the one thing Congress intended it to do: create jobs.

The employment report shows that – despite the Cash for Clunkers craze, and the $2 billion Congress added to the program at the end of July – motor vehicles and parts manufactures shed 15,000 jobs in August. That erased half of the jobs gained in July and continued the yearlong downward trend. The Commerce Department separately reported that spending on automobiles increased between June and July when Cash for Clunkers kicked in. However, while spending on cars went up, spending on other goods and services fell. Handing out taxpayer dollars is popular, but that does not make it good – or effective – policy.