Bailout Watch 377: Cash For Clunkers Pulled From Stimulus Bill

Edward Niedermeyer
by Edward Niedermeyer
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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.

Edward Niedermeyer
Edward Niedermeyer

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  • AuricTech AuricTech on Feb 06, 2009

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

  • PeteMoran PeteMoran on Feb 06, 2009

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

  • FreedMike I suppose that in some crowded city like Rome or Tokyo, there's a market for a luxurious pint-size car. I don't think they'll be able to give them away here in the U.S.
  • TMA1 How much did exchange rates affect this decision? The Renegade is imported from Italy. I'm wondering if that's what caused the price to reach within a few hundred of the much bigger Compass. Kind of a no-brainer to pick the larger, more modern vehicle.
  • CEastwood Everytime I see one of these I think there's a dummie who could have bought a real car , but has to say look at me driving this cool thing I can't drive in the rain like an actual motorcycle that I should have bought in the first place ! It's not Batman I see driving these - it's middle age Fatman .
  • SilverCoupe I should be the potential audience for this (current A5 owner, considering an S5 in the future), but I can't say it excites me. I have never liked the vertical bars in the grilles of sporting Mercedes models, for one thing. The interior doesn't speak to me either.I would be more likely to consider a BMW 4 Series, though not the current version with the double Edsel grille. Still, I suppose it would be worth a look when the time comes to replace my current vehicle.
  • Verbal Can we expect this model to help M-B improve on finishing 29th out of 30 brands in CR's recent reliability survey?