By on May 5, 2009

Who would have guessed it? As soon as we start reflecting on what exactly this little government foray into the auto sector will cost us, DC goes and prepares to bump up the sum. From ABC News comes a report that Democrat wranglings on the upcoming climate bill have yielded a compromise on forthcoming “cash-for-clunker” provisions. Details are still sketchy, but according to ABC, “under the new agreement, consumers will be able to trade in a “clunker”—a car that gets 18 miles per gallon or less—for a voucher for a new fuel-efficient car. The amount of the voucher will range from $3,500 to $4,500, depending upon the fuel efficiency of the new vehicle.” Want more details? Too bad. All you get for now are the assurances of one John Dingell (D-MI) that “it’s a good agreement. It means sales of autos, it means fuel efficiency and it means progress.” No word on cost to taxpayers, limits, “buy-American” clauses or other potential sources of trouble.

Speaking of Michigan reps stepping up to reward decades of auto industry campaign contributions, Rep Sander “Tweedledum” Levin has introduced legislation to double the Department of Energy’s $25 billion industry retooling loan program. “It is vital that the federal government be a full partner to the domestic auto industry’s efforts to build the cars of the future,” Levin tells DetN. “The program has already received applications for loans well in excess of the resources available, and we need to move quickly to ensure that all eligible investments are able to participate.” Because otherwise you can just kiss your $60K+ Tesla Model S and $40K Chevy Volt goodbye. The DOE has received requests for $38 billion so far, and clearly all of the requests are worth spending taxpayer money on. Why question it? Incidentally, the DOE loan program was the topic of TTAC’s Bailout Watch #1. Little did we guess where we’d be just a year and a half later.

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30 Comments on “Bailout Watch 520: Clunker Bill, Retooling Loan Double-Down Move Forward...”


  • avatar
    reclusive_in_nature

    No thanks. I’d rather keep my “clunker’. It’ll probably be worth more than what I paid for it after the feds complete their castration of the automobile industry.

  • avatar
    no_slushbox

    There’s still a window sticker on the DTS in the above picture; it looks like a Cadillac dealer found out how to clear out excess inventory.

    Watch out for parked Hummers, Pontiacs, Saturns and Saabs at your local railroad crossings.

  • avatar
    tuckerdawg

    wish i held onto my oldsmobile a little longer, coulda got a sweet deal on a fiesta! Guess I’ll settle for Jim Beam’s version…

  • avatar
    TRL

    Don’t have any comment about the wisdom or political sense this may or may not make concerning the overall health of the country. All I know is if I can get $3,500 off a new something for getting rid of my 93 F-150 with the leaking head gasket I will be near the front of the line.

    Frankly, without this I certainly wouldn’t be thinking about new car shopping at all right now. Am I an example of it working?

  • avatar
    brentalan

    I’m awaiting the additional details!!!

    Will you have to have owned the vehicle for a certain time period? Otherwise all 18mpg or less vehicles from the ’80s are worth $4500.

    What about multiple vehicles. I have a ’88 Caprice that’s not my daily driver. Will it count?

    What determines 18 MPG? fueleconomy.gov doesn’t always seem right for every vehichle. Is that highway, city or combined? Same for the new car.

  • avatar
    JG

    Is it for the good of our civilization to be subsidizing new car purchases with tax dollars?

    Somebody needs to do a study on the environmental and capital cost and the benefits of this scheme. Probably the people who are proposing it. Why can the government just start doing things without proving they are a good sound idea? Why can’t they be held accountable for failure?

    “I bought a new buick with my grandsons tax money!“

  • avatar
    Samuel L. Bronkowitz

    This is like a kid that will do anything to avoid getting a splinter taken out of his hand. In the end it has to come out for the good of the child, but in the meantime he’ll bargain away anything to forestall the inevitable pain.

    This clunker nonsense will create a temporary bubble for 6 to 12 months and then we’ll be right back where we started — and perhaps we’ll even be worse off. Isn’t that what’s happening in Germany right now? They’ve basically harvested future demand with their “clunkers” gimmick. Same thing will happen to the US.

    Does anyone think that any of the Detroit 3 are so close to saving it that the bump from a clunkers bill is going to make any difference?

    It saddens me that in a time where we need leadership on all fronts we continue to get trite gimmicks. I’m no Iacocca lover but, really, he’s right: where have all the leaders gone?

  • avatar
    GS650G

    I found a way to get double the value of my old F-150. Thank you Uncle Sam. Call it our own little bailout.

  • avatar
    superbadd75

    So does my 17mpg 2008 TrailBlazer qualify as a clunker? I imagine there must be more stipulations.

  • avatar
    Robert Schwartz

    So, will they take any old piece of trash in for a coupon to buy a brand new Civic? Does it have to run? Salvage title?

  • avatar
    BDB

    I don’t imagine there will be any “buy American” stipulations. Both because they’d like southern votes to get it through the Senate, and because of trade issues.

  • avatar
    no_slushbox

    JG:

    “Is it for the good of our civilization to be subsidizing new car purchases with tax dollars?”

    No.

  • avatar
    Robstar

    As usual, more of my tax dollars going to people who made fuel-inefficient vehicle choices.

    Here I am with my year 2000 170k neon that I’d like to trade in with it’s fantastic 3-speed automatic transmission & congress has nothing for me.

  • avatar
    no_slushbox

    Robstar:

    Don’t think Congress has ignored you. It is going to tax you. Then it is going to give your tax money to other people to buy new cars, increasing new car prices and making a new car more expensive for you.

  • avatar
    Conslaw

    If you want to drive down new car sales now, the best way to do it would be to make people believe they’ll be able to buy the same car for $3000 or $4000 less 2-3 months from now.

    The only way that Chrysler wouldn’t get killed by a cash for clunkers bill would be to make the fuel economy requirements so ridiculously low that just about any new car qualifies. If we do that, we’re missing a one-time opportunity to clean the air, save gas and jump-start the economy at the same time.

  • avatar
    JG

    I bet Robstar also didn’t buy a great big house and then got a heloc to buy a bass boat, big screen tv, fountain, and several ATV’s.

    No bailouts for you!

  • avatar
    reclusive_in_nature

    Sounds like the free market is getting a little less free.

  • avatar
    JMII

    My 10 year old “clunker” gets 30 mpg so it doesn’t qualify. I’d trade in my 8 year old 14 mpg truck (made by an already bankrupt car company) but nothing made currently gets much better mpgs while towing, so it looks like I’ll be keeping it as well.

    While Sam is right and this bill will not fix anything related to the economy (other then a short term “bump”) in the long run it should save some gas so its not a 1/2 bad idea. Clearly some vehicles should be taken off the road but I doubt even with a $4K voucher people driving such wrecks can afford a new car.

    I can’t wait to see the local car dealers running ads that claim “double your voucher” specials on Aveos, Sebrings, SUVs and whatever other lot filling rides they haven’t been able to sell in the last year.

  • avatar
    kowsnofskia

    “So, will they take any old piece of trash in for a coupon to buy a brand new Civic? Does it have to run? Salvage title?”

    Last I’d heard, the largest incentives were going to be for cars approximately 7-8 years old (which aren’t really clunkers, right?) Then, the incentives were going to taper off sharply for older vehicles…I think cars older than 1993 or so were not going to yield anything as trade-ins.

  • avatar
    troonbop

    Isn’t this wonderful? I remember the bad old days when people actually thought governments had a limited amount of money and couldn’t afford to indulge every idea, even ones that seemed attractive. Praise be to our Dear Leader, with whom all things are possible…for a while.

  • avatar
    superbadd75

    Praise be to our Dear Leader, with whom all things are possible…for a while.

    For a while, indeed. Until our pissing away money we don’t have catches up with us. Obama is doing with our tax money the same exact thing that so many people did when they bombed the economy buying things they couldn’t afford on credit. And the Democrats criticized Bush and how bad he ran up the deficit.

  • avatar
    BDB

    “For a while, indeed. Until our pissing away money we don’t have catches up with us. Obama is doing with our tax money the same exact thing that so many people did when they bombed the economy buying things they couldn’t afford on credit.”

    Not all debt is created equal.

    Getting into debt on your credit card for that new plasma TV or being in hock to a payday loan lender isn’t the same kind of debt as taking out a student loan. So first, spend on something worthwhile–something you either need as a matter of daily living anyway (car loan, mortgage) or something that will increase in value over time (student loan). Secondly, get a good interest rate.

    Credit cards have outrageous interest rates, while the federal government can borrow money for next to nothing (especially now). So the rate isn’t an issue for a government.

    What its spent on is, though. I’m split on the clunkers bill. On one hand it will help fuel economy and at least give a bump to the economy, OTOH, it could hurt by driving down long term demand even further. They should study it more, or just wait and see how it works out in Germany.

  • avatar
    kowsnofskia

    @ BDB:

    If you think the government’s current orgy of expenditures constitutes spending on “something worthwhile”, you’re sorely mistaken.

  • avatar
    BDB

    kowsnofskia–

    Is there anything you think the federal government does that is worthwhile besides spending on things that go “boom” (which is always overlooked by “fiscal hawks”)?

    It’s stupid to be for spending on anything, but it’s equally ridiculous and counter-productive to be knee-jerk anti (non defense) spending on everything. Sometimes spending works, sometimes it doesn’t. It all depends on the situation and what the government is spending on.

  • avatar
    wsn

    All you get for now are the assurances of one John Dingell (D-MI) that “it’s a good agreement. It means sales of autos, it means fuel efficiency and it means progress.”

    Excuse me!?

    But I don’t see “agreement” here. [More] auto sales is “contrary” to fuel efficiency.

    Maybe this congressman need to go back to his elementary school teacher to understand what the word “agreement” means.

  • avatar
    CopperCountry

    Here’s an idea for Chrysler dealers … “If you buy a Caliber, we’ll crush a Sebring, and you pocket the ‘clunker’ cash”

    For Jeep dealers, they could use a similar approach to get rid of all the Commanders clogging up their lots.

  • avatar
    Lumbergh21

    BDB :
    May 5th, 2009 at 5:29 pm

    kowsnofskia–

    Is there anything you think the federal government does that is worthwhile besides spending on things that go “boom” (which is always overlooked by “fiscal hawks”)?

    The difference is I can’t spend money on “things that go boom” (national defense) all by myself. I can afford housing, transportation, food, education, and most other things all by myself without the government forcing me and some of my neighbors to pony up the money for the greater good. It is hardly disingenuous to support spending on national defense and courts to arbitrate disputes internally and be against the government spending to prop up failing industries (poor corporate decisions) and ensure that individuals who are in over the head due to overspending (poor individual decisions) don’t have to pay the piper.

  • avatar
    DrivnEZ

    Silly me, I won’t qualify for this handout incentive because I purchased a 2000 49 mpg vehicle and then bought a 2009 44 mpg vehicle.

    I KNEW there had to be a good reason to buy a Lincoln Navigator. Another golden opportunity missed by poor planning on my part.

  • avatar
    skor

    My old clunker has an estimated mileage of 19MPG when new. Crap! I lose by 1MPG!

    I was actually looking forward to a new Fiesta.

  • avatar
    Airhen

    With all these Federal programs, I’m sure it will require more Federal employees to manage the program. All at the cost of the taxpayer.

    And will John Dingell be okay with using the credit on a Honda? I bet not…

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