Congress to Vote on Cash for Clunkers Program
For those of you driving clunkers, you may soon be able to turn that eyesore into cash. The House and Senate have agreed to designate $1 billion for the Cash for Clunkers program to be funded out of the significantly larger $106 billion wartime spending bill. Not yet law (Congress is expected to pass this bill this week) the bill will pay people for their “clunkers”. The goal is twofold: to get fuel inefficient cars off the road and to encourage consumers to buy new, fuel efficient vehicles.
A consumer who has a qualifying car will receive either a $3,500 dollar voucher or a $4,500 voucher. Your voucher credit depends on the improved gas mileage as compared to your current car.
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For example, if your new car purchase gets 4 mpg more than your trade, you get $3,500. If the new car gets 10 mpg better than your trade, you get $4,500. Once the voucher is received, the buyer must buy a new car from a certified Cash for Clunker dealer. This is only a great deal for those who have cars worth less than the vouchers.
On the surface, this bill seems decent but it has environmentalists up in arms, and critics are citing the bill as a big rotten lemon. The big environmental contention appears not to be the issue of crushing all the gas guzzling automobiles, but that the bill does more to sell new cars than reduce the impact on global warming. Economists are throwing the bill under the bus and claiming that it will take at least $4 billion to implement this program - not the $1 billion that has been allocated.
Well folks, it looks like our government is offcially in the car business. Do you feel a bit slimy?
I see at least two more problems:
1) It creates a moral hazard in that I, and many others, already purchased our fuel efficient cars ourselves (’05 Pontiac Vibe in my case) with our own hard-earned money. We don’t get anything for doing the fuel-efficient thing on our own, but gas-pig drivers get up to $4500 because they remained gas-pig drivers.
This is exactly analogous to a parent of two kids, one poor student and one good student, offering $100 for every school grade they bring up. The good student already gets straight A’s, so she gets nothing, while the bad student who brings up her C’s and D’s to B’s and C’s, respectively, making $500-600.
It’s nuts!
2) Since only licensed “Cash-for-Clunkers dealers” can get this, I can see them not bargaining on their fuel efficient vehicles at all. They can hold out and get a better price by waiting for someone with a voucher to show up. This could actually result in fewer fuel efficient vehicles getting sold.
The law of unintended consequenses rears its ugly head everytime gov’t passes a law.
Maybe it doesn’t do enough for those looking at it from a purely green perpective, but there is clearly more at work here than going green. Believe it is primarily for GM (Government Motors) to further prop up the auto industry. It has the feel-good ornamentation of effecting more fuel efficiency in the process, so it is intended to be viewed as a Win-Win, even if it is really a Win-win.
As for the example of the children raising their grades: while the point is well taken, recall the Prodigal Son and the Parable of the Lost Coin (1 of 10). Only those things that are lost are in need of being found. To those who have already done the right thing, take pride in that fact itself. For those of us stuck in the nineties (me literally with two 1999 vehicles in the driveway) this may be our chance to finally be able to afford to join you.
As for dealers holding back fuel efficient cars, I think it would be better to sell two cars, one to a vouchered customer, and one to a non-vouchered customer, rather than hold out for only a vouchered one. Plus, I think the market is too tough right now to get too picky.
Buy a new car now, then when you loose your job you will be walking, that will certainly “save gas”! Also you will love paying registration, tax, full coverage insurance and the inevitable increased price for fuel efficient cars.
This quick fix may saturate the market before GM and Chrysler are ready, making their comeback more difficult or like in Europe the whole thing will just fizzle out and go away.
From a environmental stand point this bill should have been introduced when auto companies are ready to meet the new tougher emission standard. This bill in fact will do harm by putting a new fleet of slightly more efficient cars on the road for 10-15 more years as opposed to much more efficient cars due out in a year or two from now. I am starting to think that our new leadership is just rushing though without thinking thing out, for example “Obama is going to do for healthcare what he has done from GM”, that doesn’t sound good.
I would certainly participate in this…if we also had the option to buy a more fuel efficient USED car. The incentive should be only for better gas mileage, not to consume and produce more vehicles.
Yes, the car companies are in trouble. But does that excuse getting more “stuff”? Consuming and manufacturing more? It reminds me of someone I love who put on her wedding registry a lot of things she already has! Yes, the new “stuff” may be nicer, and yes she may be donating to old “stuff”, but she doesn’t need more “stuff”!
This program is consumerism, pure and simple. They’re trying to get us back to the bad ol’ American way.
My family cannot afford a new car right now, but we would carefully choose a used more fuel-efficient vehicle, if we could find one.
Here in the UK the cash for clunkers vibe is already over, sake did rise by I think 24,000 in the first month, the cars which were taken out of circulation were swifly shipped out to either India or China to be made back into more cars, its all about cars.
80 percent of the car sold in the UK were forein makes so our industry has stayed the same at rock bottom.
In the US the tonnage gained by old clunkers is much greater than here is the UK, where the average car is two and a half times smaller and lighter, the tonnage that the US brings to the salvage total is worth how much ? a pretty sum I bet, but crushing, transporting and shipping that material out eats right into what differences you actually gain,
Cash for clunkers is a purely governmental b***s up if you ask me, it was destined to fail before it even started.
If the average American adopted the fuel efficient approach like we have here in the UK, drop the size of your motor, it would save the planet the indignity of working together with yourselves in stealing the worlds resorces from one another just like they we are doing all around the world today, have 5.0 under the bonnet will drive, right over everybody in their way.
Absolutely disgusting the whole scenario of oil and the car.
I think this is a great plan. Auto sales are stagnant in the US right now and we need something to get things moving. As Rhett said, some people are legitimately waiting for this help to purchase a new car. Someone with a piece of junk in the driveway and no down payment can more than likely buy a car now. As for dealers not selling cars, that’s ridiculous! There isn’t a car on the lot at most dealerships that doesn’t get more than 4mpg better than an old clunker. If dealers start turning away deals because they don’t have enough cars to sell then the plan worked anyway.
I understand the fear of people taking advantage of the system, but lets think about how this would actually work. The bill is only good for “new” cars. That means that you are paying a minimum of 13 or 14K. If you can get financed or have 13K lying around you probably aren’t the proverbial “D Student”. Remember that the car has to be worth less than the $3500 voucher for this to be worth it for someone. That means that if you are an average Joe that has the credit or money for a new car and you decide you’ll go ahead and trade in your 5 or 6 year old car that’s probably still worth 4 or 5K, you don’t gain anything by doing this.
This should work. All the hillbillies with cars on blocks in their yards aren’t going to be driving new Corolla’s next month, as they can’t afford a new car in the first place. So I wouldn’t be worried about the 2M budget getting out of control because most of the people that have these “clunkers” can’t buy a new car anyway.
I think that its terrific clunker law; get all those gas gusslers off the road I also happen to have a clunker and will soon be getting a 2010 ford fusion; and it will be a pleasure to drive and save money at
the gas pumps….right I say so ?????
I think this is a great program, especially since I am in the market for a car and this would get me to buy new…
BUT, from what I have read it is only for cars 84 and newer. This makes no sense to me. I have an ‘82 Volvo that I would love to see crushed and the recycle value of my car is much higher than something made ‘84 or newer.
Therefore I will settle for a used vehicle…
[...] Senate passed the Cash for Clunkers Program today which gives consumers with cars that get less than 18 miles per gallon the ability to turn [...]
Um, Mike? Not all of us who can’t afford a car right now are either a “D student” or a “hillbilly.” (I take exception to that comment, considering I live in VA. Many “rednecks” around here drive nice cars and trucks. They have to. This state can’t use snow plows properly.)
Actually, the car companies –boohoo– aren’t the only ones in trouble. I lost my job last October and have been doing freelance work since. Therefore, I’m on an incredibly tight budget and don’t want to shell out a couple hundred extra a month in car payments.
So yes, a more fuel efficient used car would be a better option for me and others like me, who can’t afford to take on more debt.