Cash for clunkers…the phrase is gaining prominence by the day. There are several proposals that fall under this heading, and while they differ in some significant ways, they all have the same goal and premise.  Trade in your old, gas-guzzler for a voucher or tax credit towards the purchase of a new, more fuel-efficient model. There are THREE basic points that differ between the proposals: amount of the voucher/tax credit, how old/guzzling the old car must be and where/by which company the new car was built.

Rep. Betty Sutton (D-OH) has drafted legislation that would give buyers vouchers of $3000 to $5000 if they turn in cars that are eight years old or older and buy new cars that get at least 24 miles per gallon on the highway or trucks that get 27 mpg. The money could also be used for mass transit. Sen. Dianne Feinstein’s (D-CA) bill, which provides incentives of $2500 to $4500, the “clunker” could get no more than 18 miles per gallon. The new car would have to exceed fuel-efficiency standards for its class by at least 25%. Feinstein’s places a price ceiling of the new vehicle at $45,000, while Sutton’s has a cap of $35,000.

Some argue over the amount of the voucher/credit. I have no opinion here. I would leave that up to some economist with elbow patches on their tweed jacket.  It just needs to be enough to have its intended effect - getting enough clunkers off the road to make a difference in emissions and spur the economy.

I think that specific numbers for the fuel economy part don’t make sense.  The new vehicle simply needs to be much more fuel-efficient than the clunker.  What if your present vehicle is a 1978 Chevy pickup that gets 11 MPG and you need to have a pickup for whatever reason. Wouldn’t a Chevy Silverado hybrid that gets 20 MPG in the city and 20 on the highway be a great choice and one that is worthy of the subsidy? I think Feinstein’s bill comes closer to my point here, but wouldn’t trading a 20 MPG car for a 35 MPG car still be a great idea?

The last point is the one that really gets peoples’ blood boiling.  To exclude or not to exclude - that is the question. Some proposals only include US-made vehicles; others include all points of origin. Say you want to include only “American” products. OK, but what does that mean? These days, that is a pretty ambiguous term. Should a Toyota Camry, made in Kentucky, be included? What about a Honda Accord made in Ohio? On the other hand, how about a Chevrolet Aveo, made in Korea? I think that the reason for this proposed legislation is to help spur the US economy. Therefore, all US-made cars and trucks should be eligible for the incentive. Another wrench in the works are cars like the Ford Fusion and Chevrolet HHR, both made in Mexico. Should these qualify? I think so, because Mexico is only their final assembly point. The design, engineering and all other related activities are in the US. So my final answer is that all brands if US-made or US brand if made in North America should be eligible for the incentive. Foreign brands will not like this, but let’s be honest here. These bills propose to clean up the environment a little while spurring the US ECONOMY. Vehicles designed, engineered and manufactured elsewhere quite simply do not spur the US economy. We should not be subsidizing the sale of those vehicles.

That’s my story, and I’m sticking to it.  Comments? Feel free to leave them. I might even respond.

1 Comment »

1. 

   I’m with you - except for the part about which vehicles qualify, and even then I’m with you in theory, just not in implementation.

   The whole purpose of this, as you indicated, is to spur the US economy. Not the Japanese, not the German, not anyone elses other than the American. If the point is to do something other than that, then I say let the legislation die or let some other countries kick in some bucks to fund it.

   With that established, the question then becomes: How do I get the best return on my investment? The answer to this is simple and clear: by allowing only those vehicles that return the profits, and therefore the investment, to America, to qualify.

   Yes, yes, plant jobs at the BMW, Honda, etc plants are valuable. But they are not nearly as valuable as the amount returned by the purchase of an American vehicle (which means, incidentally, “built by a US headquartered company”) which may or may not cover the manufacturing job, but does fund the R&D, Engineering, IT, Finance, etc jobs. In other words, a non-US company vehicle may fund 1 job, but a US HQ’d purchase funds several.

   Those are my thoughts - but then again, if more people in the US were smart enough to think strategically (which means thinking beyond yourself) instead of tactically (thinking only of yourself) then we wouldn’t be having this discussion at all. And for anyone who wants to argue the point, you may simply look at Japan and China. Japan didn’t used to have high quality cars, but the Japanese still bought them because it was good for Japan. China still doesn’t, and yet the Chinese buy them because it is good for China. Oh yeah, and the Chinese government won’t let anyone else sell cars there.

   d-

   Comment by dbaker34 — 7 April 2009 @ 11:09 pm

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