Cash for clunkers
Buckets of bolts for the low, low price of $1 billion
By Jennifer Hadley 07/09/2009
Like many of my fellow Gen Xers, I have the attention span of a flea. So trying to pay attention to where the gazillions of dollars that our government is printing and doling out is actually going has been challenging. But occasionally I’m able to focus my attention long enough on a specific spending bill to really get worked up into a state. Recently, the approval by Congress of the Car Allowance Rebate System (CARS) aka “Cash For Clunkers” has my brain firing on all cylinders.
I’m not going to bore you with all of the details of the bill, but edmunds.com does a great job of laying it out. To generalize, CARS aims to encourage owners of cars made within the last 25 years with an average fuel economy of 18 mpg or less to trade in their clunker and purchase a newer, more fuel-efficient car. The government will reward you for doing so. In fact, you may be eligible for up to $4,500 from the TARP fund to use as your down payment.
With a $1 billion — to date — spending cap on this bill, CARS was signed into law by President Obama and could potentially result in the issuance of up to 250,000 vouchers to Americans to get their gas guzzlers off the road, all the while “stimulating” the economy. Indeed, if you qualify, the government will electronically transfer the amount of your voucher directly to the dealership where you buy your new car. The dealership, in return, must crush your old car.
I can see the benefit in getting less fuel-efficient cars off the road and replacing them with hybrids, for example. Not only is this better for our environment, but we’ll be stimulating the economy by purchasing a new car. Moreover, since we’re all pretty broke right now, saving money on gas by purchasing a more fuel-efficient car, could potentially free up money that we could use to purchase other goods. Therefore we’d be doubly stimulating the economy, right?
Theoretically this sounds like a swell idea. But it’s also pretty pie-in-the-sky. I’m not the first to notice that this bill assumes that there are lots of people driving around a car that is worth less than $4,500 and can actually afford a new car. See, if you can sell your car or trade it in for more $4,500, the vouchers make no sense at all. That puts SUV driving gals like me completely unable to capitalize on this “stimulus” bill, even though I’m helping to pay for it. Thanks a lot.
Ironically, CARS also excludes those who want (and can afford) to buy a really nice, really expensive car from qualifying for a voucher. For example, say I’ve been driving around a 1990 Ford F-150 for years. I’ve kept this car because I’ve been saving up for my dream car, a BMW 550i Sedan. My Ford gets 15 mpg, and has a true market value of $995. Since it’s worth less than $4,500, and the BMW gets 22 mpg (minimal gas mileage requirement on the new passenger car), I should qualify for a voucher. Unfortunately, I don’t because the price on the new car must not exceed $45,000. My beloved Beemer starts at about $60,000.
This seems not only unfair, but completely contrary to the goal of the bill. Why limit the price of the car that you can purchase? A more expensive car equates to higher sales taxes and licensing fees. Wouldn’t buying a more expensive car stimulate the economy even more?
Listen, I’m not saying that the bill wasn’t drafted with the best intentions. But is it really the government’s place to help us buy new cars? Heck, I could use some new shoes. Maybe if I had new shoes, I’d walk more often and reduce the amount of driving I do altogether.
Perhaps I should propose a “Funds for Footwear” bill and see if I can’t get the government to step in and help me buy new sneaks.
Since there’s no going back and we’ve already committed to burdening future generations with astronomical debt, shouldn’t we at least make some effort to stop piling on more of it — putting our collective credit card at the Capitol on ice. Instead, we’re going to be giving them a $1 billion past due notice for a complete clunker of a bill.
Contact Jennifer Hadley at email@example.com.