Offering ‘cash for clunkers’
Is it a good idea for the government to pay people to trade in gas guzzlers for cleaner cars?
The government will be paying you to dump your old gas guzzler for a more fuel-efficient model.
(Corbis/JLP)
What happened
The Senate overcame Republican objections to clear a $1 billion “cash for clunkers” program, attached to a $106 billion supplemental war-funding bill. The House already passed the “clunker” provision, and President Obama is expected to sign it. The program offers vouchers of $3,500 or $4,500 to people who trade in gas-guzzling post-1984 vehicles for new, more fuel efficient models. (USA Today)
What the commentators said
Why would the GOP, or anyone, oppose a program that will “boost the economy while protecting the environment”? said Ashley Rindsberg in The Huffington Post. Really, it’s a “win-win-win”—the bleeding U.S. auto sector sells up to 1.5 million more new cars, Congress gets a “substantive and political win,” and Americans get help replacing their “old, gas-guzzling, polar bear–killing ‘clunker’.”
That's great, if you can afford a new car, said The Seattle Times in an editorial. But the vouchers won’t help the poor, who are more likely to buy a better used car. The program also is skewed to reward “extreme gas guzzler” owners over Prius drivers, and there’s no rule, or guarantee, that the vouchers will even be used to buy American cars.
Besides, $4,500 will cover little more than the down payment on a $27,800 car, the average price for a new vehicle, said Carlos Lam in Seeking Alpha. People will have to borrow the rest. It’s “foolishness” for the government to be tempting consumers to take on new debt, when too much debt is why we’re in hot water in the first place.
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5 Comments
Posted by Jim Chapman, Friday, June 19, 2009, 3:26 pm So let's get this straight. I'm out of work and luckily I have my car paid off. If I trade in my no payments due vehicles..then I can take on a note for 1520 thousand dollars. doesn't sound like a stimulus for the unqmployerd.Also, If memory serves me right. Any time the car companies offered rebates to stimulate sales...they ending up killing the values of the used car market.Are they flippin crazy?
Posted by Mike, Friday, June 19, 2009, 5:04 pm OK, but not everybody is out of work. If the ones who can afford to are coaxed into buying new cars, they will create jobs for car manufacturers, car dealers, parts manufacturers. Newly employed auto industry people might make some purchases too creating more jobs and lifting the economy. Sounds like a winwinwin to me.
Posted by Mark Thompson, Saturday, June 20, 2009, 2:11 am Uhm, this sounds like a scam. Can we buy or acquire a 300 used car to get a 4500 tax credit on a new car in the same year?
Posted by Adam, Saturday, June 20, 2009, 2:16 am No thanks Obama, I'll keep my car that's paid off and you can stop WASTING our taxpayers dollars.Will the government make my car payments for me if I get unemployed? NO? How am I going to even afford a car payment now anyway with all of these higher taxes and now gas prices going higher and higher?Maybe you could have sent our 1 Billion dollars by actually helping the unemployed and homeless families more you jackass.
Posted by J. Davis, Saturday, June 20, 2009, 11:22 am I don't think there will be many people with a 1000 or so value car who will be able to or willing to buy a new car. So basically the program will be a flop. If they let people buy a used higher MPG car with the credit, even a reduced credit, it would be a lot better for the environment.
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