Bailout Watch 377: Cash For Clunkers Pulled From Stimulus Bill
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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