U.s. Is Planning 'Cash For Appliances' Program

November 27, 2009|By Peter Whoriskey | Peter Whoriskey,The Washington Post

WASHINGTON - - In U.S. history, there may have been no better time to own a junk car, a rattling old fridge and a leaking dishwasher.

On the heels of its ballyhooed "Cash for Clunkers" program for cars, the federal government is expected to finalize details in the coming weeks of another tax-supported shopping extravaganza, known as "Cash for Appliances."

Supported by $300 million from the economic stimulus, the program will offer rebates to consumers who buy energy-efficient refrigerators, dishwashers, air conditioners and other appliances to replace their older models.

Maryland could receive more than $5 million in the program.

And like the $3 billion cars program that gave consumers money for swapping their clunkers for more fuel-efficient rides, the appliance initiative seems destined to inspire shoppers, drive up sales for a while and profoundly divide economists over how much lasting good this chunk of government spending will do for the economy.

"The premise seems to be that for Americans to be richer, they need to throw out their old appliances faster - I don't see it that way," said James Hamilton, an economics professor at the University of California at San Diego, who has blogged about the clunkers rebates.

While many economists believe that government incentives to lift consumer spending can boost the economy during a recession, they differ over whether the sales spikes that accompany the rebates are meaningful or merely concentrate sales that would have occurred before and after the rebate period anyway.

The Obama administration's Council of Economic Advisers has indicated that the clunkers program provided a worthwhile boost even though many of the 690,000 clunkers sales would have happened anyway. In their baseline assessment, the program increased car sales in 2009 by 330,000.

The appliances program may be destined to continue the debate.

For when it comes to stimulus, timing can be critical, and the implementation of the effort has dragged on, possibly diminishing its usefulness.

Although the $787 billion stimulus program was signed by Obama in February 2009, much of the cash-for-appliances money won't hit the streets until February, March or April 2010.

The rebate program is being run by state governments, which must define and enact their rebate plans with federal government funding and approval.

A survey of some of the largest states shows that California is planning to begin its program in March, New York in February, Pennsylvania in the spring, Illinois in January and April.

Under the program, Virginia is expected to receive $7.5 million and Maryland $5.4 million, but the requirements and rebates have not yet been disclosed.

Home appliance manufacturers who celebrated the passage of the program worry that the delay in its implementation might depress sales at first, with consumers stalling on purchases until the rebates begin.

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