Cash-for-Clunkers Bill May Fall Afoul of Pseudo-Patriotism
After Germany’s cash-for-clunkers sales surge, it was only a matter of time, and not much of it, before the US followed suit. The idea failed to make into the federal stimulus package (which is like calling an all-you-can-eat buffet a Weight Watchers’ Special). And so, a bill is born. CNNMoney says aloha, clunker-mania.
The bill, introduced Tuesday by Rep. Betty Sutton, D-Ohio, would provide on- the-spot vouchers between $3,000 to $7,500 to consumers who trade in older vehicles for new, more fuel-efficient cars and trucks. The size of the vouchers would vary, depending on the fuel economy of the car being purchased.
The older vehicles, required to have been built at least eight years ago, would be scrapped and their parts recycled, while the new vehicles would have to meet a certain fuel economy standard – 27 mpg on highways for cars, 24 mpg for light trucks, Sutton said. Consumers could also opt to receive a $3,000 voucher toward mass-transit fares.
Sounds great! How could that possibly go wrong? You know . . . other than all the unintended consequences?
But Sutton’s bill – strongly pushed by Ford Motor Co. (F) and backed by the United Auto Workers – would preclude vouchers from being used on some of the most fuel-efficient cars and trucks, including the Toyota (TM) Prius.
The vouchers would also be limited to cars assembled in North America. “I do not think there should be an expectation of American taxpayers (that) we have to use our tax dollars to incent[ivize] Americans to buy foreign automobiles,” said Rep. Candice Miller, R-Mich., a co-sponsor of the Sutton bill.
More verb[iz]ing? Never mind. Do the domestics really want to open that can of worms? Do they really want the public to scrutinize from whence cometh Chrysler, Ford and GM vehicles? The parts inside? Do they really want to raise the profile of previously invisible non-D2.8 American auto workers whom are getting well and truly stiffed by the Motown bailout buffet?
And what about the obvious question of free trade agreements? WTO? NAFTA? Hello? The head of the US Chamber of Commerce warned against this approach. We’ll keep you posted.
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This is designed to reward crappy car companies and punish the good ones. I mean, after 8 years, a Toyota Corolla can typically fetch $3000~5000. But a Chrysler Neon/Caliber can fetch about $500~3000. By imposing an 8 year limit, the policy basically made sure crappy cars have the same resale as the good ones. Plus, it actually hurts the environment. If most cars can last 12 years (typical), but we offer the incentives to scrap them at 8 years, then we will produce and buy 50% more cars than needed. That's a huge waste of resource that could go toward education or health care. Not to mention all that extra environmental footprint; think about all the electricity used to produce 50% more cars and the coal pollution caused by generators.
The minimum age is 8 years, what is the maximum age? I suspect a lot of crappy beaters will come back from the grave only to be "culled" for the subsidy if this passes. I also suspect that many of the scrapped cars will wind up overseas distorting other used markets.