Just before dashing off for their August break, Congress today tripled the total investment in the Cash for Clunkers program, adding $2 billion to the existing $1 billion that's already been allocated and spent. Cash for Clunkers is the program under which car owners can trade in a qualifying vehicle -- one that gets 18 miles per gallon or less -- for another, more efficient vehicle. Improve the mileage by at least 4 mpg and you get $3,500 toward your new vehicle; raise it by 10, you get $4,500.
Credit: Flickr/mazdamiata/ / CC BY-NC-ND 2.0
The downside so far is that the program isn't well-organized, and so we may be pouring good money into creating nationwide headaches for dealerships. There's another way to look at this, though: what if we think about Cash for Clunkers as a pilot program, instead of a discrete single-time slush fund?
Cash for Clunkers has been wildly popular so far, and it seems like a program that could benefit quite a wide swath of the population if it continues. People can get more fuel efficient cars, which is better for the environment and better for the country, as we start needing less fuel from overseas. The car dealerships make some sales, which means the people at the dealerships get to keep their jobs -- and get to spend their paychecks in the community. The auto industry gets the picture, that Americans are (slowly, yes, and perhaps not permanently) getting tired of driving gas hogs, and they continue (and perhaps accelerate) their race toward greener technology.
I'm a little afraid that, in the great governmental tradition, Cash for Clunkers will become either a a permanent program, unchanged except, probably, by increasing bureaucracy and internal inefficiency, or, worse, that it will become a one-off, one-time feel-good solution to a series of much larger problems. Congress gives Cash for Clunkers more funding and congratulates itself for helping business and the environment; consumers buy a (sometimes only slightly) better car, and feel better about their own investment; and everybody quickly forgets that this is a start, not an end.
Why not consider Cash for Clunkers a pilot program in a larger package of government involvement in improving America's motorpool? For instance, what of the cars -- as shown and noted extensively at No Cash for Clunkers -- that are, by condition if not by model, no longer as efficient as they could be? What if instead of $3,500 a person to buy a new vehicle, the government offered 30 or 40 percent vouchers toward repairs that make a vehicle more fuel efficient (pending government inspection)? What if they offered a flat $3,500 for turning in a car and replacing it with a bicycle? What if they handed out bus passes for free in the city, contingent upon the tickets being used for a certain number of trips every week?
Cash for Clunkers got quick Congressional support because it's being billed as an auto industry rescue plan as much as (and sometimes more than) an environmental program. Every program above, however, could be billed the same way. In this economy, job creation and retention are the magic bullets of legislation. Democrats and Republicans voted for C4C today. Maybe the same coalition could be swayed to make more major steps toward environmental protection in this, well, environment, if only the White House would work on framing the issue as one of long term economic protection instead of short-term economic intervention.
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Catherine Forsythe
Writer to the Stars
Emily Holleman
Iron Skillet
Leslie Harpole
old new lefty
Salon.com
Comments
But back to the cars, it's taking a lot of energy to take the cars back, fix them up [sell them abroad?], dismantle them, etc. There is no energy savings here to be honest about it. It's just a redistribution of energy. It is a temporary feel-good use of my/our money. Where does everyone think this money is coming from?! It's coming from us. rated.
You mentioned repairs--which repairs? For when a car breaks or blows oil or coolant out the exhaust because it hasn't been maintained? And if it hasn't been maintained, a warranty won't cover it either. So why should the government?
Tires? Good idea. Proper inflation can do as much to improve fuel economy as a tune up. It contributes to safety and handling too. It keeps tires from wearing out prematurely. A tire pressure guage costs $1.50 at WalMart.
Filters? Changing air filters on schedule saves lots of gas.
And how many people would take the government up on a "bikes for clunkers" program? Not many. Very, very few.
I like the idea of bus or other transit passes. The local "Sprinter" light rail that runs through my city cost $500 million and generates $1 revenue per passenger with an operational cost of $6 per passenger. That's a real cost effective system.
CARS is one of the few good things for consumers that have come out of this economic debacle. I'll be writing a post on it over the weekend. Briefly put, if the new injection of funds is approved by the Senate next week, the total outlay will be $3 billion to help stimulate the sale of up to 750,000 new cars or about 7.5% of the number of new vehicles projected to be sold this year. If consumers are financing $4500 less for their new vehicle that means they'll spend roughly $100 per month less on their car loan over the course of 60 months. And, dealers are seeing the strongest traffic they have in years because of CARS. The average car salesperson makes only about $3000 a month working 50-60 hours a week.
$3 billion. And it will help thousands of dealers move more inventory. That's compared to well over a trillion spent to bail out banks. And the public has seen zero direct benefit from that.
This is a good deal and boosting it by another $2 billion is a better deal. It doesn't matter if the auto manufacturer is American, Japanese or German. It's all part of the American automotive industry.
I'm happy with this as a one time program with a total of $3 billion. The industry and consumers need a shot in the arm now. Next year is another thing all together. Hopefully, things will have changed by then.
And parenthetically, according to the Cars.gov website, used vehicles do NOT qualify although I think it would be beneficial to include Factory Certified pre-owned vehicles.
Because there are better ways of doing it, perhaps? I think of it this way: The current program is worthwhile in a few different ways: it's apparently an effective stimulus (something that those opposing it on philosophical grounds never seem to acknowledge); it's putting money into an important industry that's having problems; it reduces our need for oil; and it's good for the environment. There's a natural time limit, we hope, on the first two needs. And there are much more direct ways of handling the latter two than subsidizing car purchases. Fuel taxes to account for externalities like pollution, for example. Or more federal funding for research on more efficient transportation technology.
It also has the added benefit of getting low mileage, high emissions vehicles off the road and replacing them with vehicles that get 33 percent better mileage. Remember, you've got to get 18 mpg or less and you've got to replace it with a vehicle that gets 24 mpg. That cuts down on emissions and reduces the amount of oil that we consume.
As for the dumbasses who argue this is a bad program, look at who they are. Doofuses like William Krystal, who argued that the Iraq invasion would cost a billion bucks, tops.
As for the government controlling what you buy, uh, no. People are free to buy whatever they want. They just won't get the $4500 if they don't buy what's on the list.
As for the tax deduction argument, Dolpies, do you think a $4500 deduction (not credit, and there is a difference in case you didn't know that) would stimulate demand now? Not really. People wouldn't see that hit until April. If you want to stimulate sales now, you've got to make them want to buy now. Offering them something in April won't do that.
And of course that is exactly what cap and trad will do too. Drive up energy prices on those who cannot afford it in the first place.
750,000 usable cars being destroyed. Not only could have been donated, but not cheap "clunkers" which is all someone could afford are not available any more.
But that is ok. I sure I can just pay some more taxes to buy the poor a hybrid later on. Or help pay their electricity bill.
No doubt Obama will notice how his policies put hardship on the poor and he will just tax me some more to pay for that too.
Throwing a way a usable car is like throwing away food in front of a hungry person. Somebody had a real need for these cars and their need was ignored.
Brilliant. I wonder if all the poor who voted for Obama feel like this is a good policy.
Also, if the program becomes permanent, the free market will adjust to it in such a way that ultimately more cars will be produced and purchased. The permanent rise in new car demand would equal more used cars to replace the ones being scrapped in a market that is already saturated anyway.