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MrHen comments on Logical Rudeness - Less Wrong
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I don't know anything about the Clunkers program, but this doesn't sound completely irrational to me. If X does both A and B at 60% efficiency and Y will do either A or B at 100% efficiency, which is better? (These numbers are just examples.)
This behavior seems different than the example from the OP which seems to be more like:
X is true because of A!
A is impossible
X is true because of B!
B is impossible
X is true because of A!
*facepalm*
Fair point. This is more like "Program X does A, but really inefficiently." "True, but it also does B!" "OK, but it also does B really inefficiently." "True, but it also does A!"