Who knows. If Jack Hidary had made any sudden moves during a train trip to Washington this past winter, "Cash for Clunkers" may never have occurred.
Hidary, a serial entrepreneur and one of the co-authors of an article that lead ultimately to the $3 billion program, was taking a train from New York to D.C. this past winter to pitch the Obama transition team on including a car exchange program in the$787 billion stimulus bill.
At Wilmington Delaware, secret service agents in trench coats and dogs boarded, followed by then Vice President-Elect Joe Biden.
"I've got to pitch the Vice President," he recalled. "I thought, 'I will walk slowly so they don't think I'm going to harm him.' "
Biden "looked at me askance. I was wearing a suit with a T-shirt... I sort of look like I came out of N'Sync," Hidary said. Nonetheless, the two spoke for a few minutes, Biden thanked him and no arrests occurred.
Since then, the concept has gone big time. Obama signed a bill for a $1 billion car allowance rebate program in the spring that permitted car owners to turn in older cars and get $3,500 to $4,500 toward more efficient models. A $2 billion extension was signed today.
The additional $2 billion will come out of the loan guarantees for other renewable energy programs, but Hidary predicted that won't last. Speaker of the House Nancy Pelosi and Harry Reid in the U.S. Senate are already working on ways to get an independent allocation of funds for the program. (Hidary recently also founded asolarcompany called Global Solar Center that conducts solar installations over the Internet.)
"We will get that money replaced, but in the next three weeks that is where it will come from," Hidary said. "My vote is to allocate that from TARP." Goldman Sachs, he noted, has already returned $1.1 billion to the TARP fund, created last year to buoy investment banks.
So where did Cash for Clunkers come from? In the spring of 2008, Hidary had chaired a committee to get New York City to adopt more hybrids as taxis. It worked. However, Hidary began to study car replacement cycles, which are long and slow. It can take two decades before a car finally gets retired and in recessions consumers will drive their cars 30,000 and 40,000 miles longer than normal.
"I realized [the standard pace of hybrid sales] wouldn't make a dent in greenhouse gas emissions without a faster refresh," he said.
About that time, he came across articles about a trade-in program in Texas that gave low-income car owners $3,500 toward new cars. A similar program had been tried in Turkey. Further research led him to Alan Blinder, a noted professor at economics at Princeton who had extensively studied the issue.
Blinder began referring people who wanted more information on how these programs worked to Hidary. Soon, Hidary was working with Bracken Hendricks at the Center for American Progress and the American Council for an Energy Efficient Economy.
The idea received a public airing in September 2008 at the Clinton Global Initiative. Hendricks and Hidary then authored an article in November that disseminated the concept further. The ideas contained in the article essentially involved mutual compromises between ACEEE, the Center for American Progress and Hidary's SmartTransportation.org.
Often, ideas in politics die after that. Connections kept this one afloat. David Sandalow, the assistant secretary for policy and international affairs, got pitched. He recommended the backers talk to senators Evan Bayh and Ken Salazar.
Both senators liked the idea, but Bayh later dropped out because of concerns about financing, said Hidary. Salazar liked the idea, but in 2009, the group got some good news and bad news. The good news: Salazar wanted to sponsor it. The bad news: he was giving up his senate seat to become Secretary of the Interior so he couldn't be the sponsor.
Later, the backers were able to secure backing from Dianne Feinstein (D-California) Susan Collins (R-Maine) and Chuck Schumer (D-N.Y.) and from Democrats in the house. The initial idea was to get it into the stimulus bill, but that failed.
Questions continued to swirl about the financing. Would it cost too much? Would customers care? Luckily for the backers, Germany had voted in its own clunker bill.
In the first month, German auto sales nationwide were up 20 percent. The next month, car sales rose 40 percent. German ultimately increased funding from $1.5 billion Euros to $5 billion Euros. At the end of March, Obama announced support for the bill. Victory!
Not quite. In committee the bill began to get attenuated down in the negotiations over the cap-and-trade legislation.
"It was after a Bob Dylan concert and I was getting all of these crazy business calls. 'They're watering it down,' " Hidary said. "I said, 'Don't worry. Let's see what happens.' "