Issuing grants for such things as cars is hardly what the Founders had in mind when they created the American System of economics, which is supposed to invest in the fundamentals, such as water, power, truly efficient transport (maglev intercity and intracity, which would do the driving for us and last "forever"), health care, education, fundamental research, etc. which pay for themselves over the long run. This expenditure on cars can be compared to an all-out feel-good effort to rebuild the WTC, which would divert resources from other projects and when finished would not provide what we would need to progress to the next stage of recovery.
But this "cash for clunkers" program is small, and probably partly intended to create the illusion of a recovery amidst all the behaviorist economist brainwashing that the economy is recovering. So, it's not really significant one way or the other. But if it were done on a massive scale, we'd find that it wouldn't pay for itself, as would the same amount spent on the aforementioned basics. We'd still have to drive on roads that are falling apart.