By on February 6, 2009

CNN Money reports that Sen. Tom Harkin (D-IA) has pulled the “Clunker Culling” proposal from the economic stimulus plan making its way through Congress. The provision would have provided up to $4,500 in tax credits for scrapping a used vehicle with under 18 mpg and replacing it with a new car. The bill would have cost taxpayers up to $16b, according to CNN, which notes that lack of support from Republicans doomed the bill. Why? Apparently, “the provision required that the [new] vehicle be assembled in the United States.” Who knows, maybe common sense even had anything to do with it. President Obama did not take a strong position on the Clunker provision according to the Detroit News, but he is vocally backing $2b in battery development spending and a $600m purchase of fuel-efficient cars for the government fleet.

“Critics of this plan ridiculed our notion that we should use part of the money to modernize the entire fleet of federal vehicles to take advantage of state-of-the-art fuel efficiency. This is what they call pork,” Obama said in a speech at the U.S. Energy Department in Washington. “You know the truth,” the president said. “It will not only save the government significant money over time, it will not only create manufacturing jobs for folks who are making these cars, it will set a standard for private industry to match.”

Meanwhile, the Wall Street Journal reports that by not naming a Car Czar, Obama is delaying efforts to negotiate an agreement with the UAW and GM/Chrysler bondholders. The deadline for a Car Czar appointment is less than two weeks away, and Chrysler’s Jim Press says his firm isn’t even in talks with bondholders. Obama has teams in the Treasury and National Economic Council working on the auto industry issue, and the WSJ’s unnamed source says, “we assume and expect that the companies will bring forward restructuring plans consistent with the terms of loan agreement on Feb. 17, and if they are not able to meet those terms we expect them to present an explanation for why that’s the case.” According to one GM executive interviewed, “apparently, a lot of candidates do not want that (Czar) job.” Great.

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6 Comments on “Bailout Watch 377: Cash For Clunkers Pulled From Stimulus Bill...”

  • avatar

    Ouch! Someone just swiped my portion of a pork sausage bail out, because I’m getting close to retire one of my 40 year old clunkers.

    That said, the fastest way to give money back to Main Street is to just give us wage earners back some our tax money without any middle men.

  • avatar

    “That said, the fastest way to give money back to Main Street is to just give us wage earners back some our tax money without any middle men.”

    We tried that last year. Epic fail.

    As it turns out, giving people $600 checks that they will either save or spend on imported Japanese electronics (that are of course made in China) doesn’t stimulate the economy. Who would have thought?

  • avatar

    It’s been said that a sales tax increases savings and decreases consumption. So, if the Feds want to increase consumption, perhaps they should do the opposite of a sales tax… offer to pay people’s sales taxes for them. That being said, we got into this mess because of too much consumption and not enough savings, so why is the “solution” to promote even more consumption and reduce savings even more?

  • avatar

    Yep everytime I hear the Car Czar thing brought up I cringe. The best car companies on this planet are all struggling but somehow there is this mythical person that knows how to oversee the industry? Its a joke. Obviously there are entire divisions of companies dedicated to this figuring out the auto industry. Thinking you will find a magic bullet in a car czar is not going to happen. Why dont you throw in a financial czar too while your at it.

  • avatar

    If I’m reading that Russian correctly, it translates to “non-winners.” Or, if you prefer, LOSERS!

  • avatar

    No clunker culling? That just means it will be replaced with something stupid’er and more short term.

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