The “cash for clunkers” bill
Let me begin by saying that the motivation behind the cash-for-clunkers bill, as it’s called, seems to be sound. Stimulate the economy and get extra-polluting, extra-consuming vehicles off the road, thereby cutting fuel costs and increasing our national security by diverting money from supporters of terrorism; it’s hard to argue with the goals.
The bill itself, as usual, has some fairly hefty flaws. First, applying it to vehicles costing over $25,000 reduces the stimulus aspect, in my opinion. People who can buy a $45,000 vehicle (the bill goes that high now) don’t need a stimulus package.
Second, it applies to cars made before 1998. I would stop it right there. 1998 is 11 years ago; there are precious few cars left from that era (as a percentage), and they’re not really a problem. I would argue that any car that old has survived well and should be left alone. At least, stop by 1995. At some point the enthusiasts’ needs come in; and even if I did not care about the hobby, I would care about the opposition that hobbyists are sure to generate. At the moment I can see thousands of those rare cars like slant six Valiants, 318 Furys, and the like being sent to the crusher for those $2,000 checks. That’s just wrong. Though, to be fair, Hollywood could stand to have a few less 1964 Mustangs. (Or do they just have one that they paint each week for a different movie or TV show?)
Third, the program should, in my opinion, ONLY count towards domestic product. It’s coming out of OUR TAXES and I see no protectionism in my proposed modification. Just self-preservation and common sense. Why should our taxes support Mercedes and Subaru? (Note that I put in a company I dislike along with one I like.)
Finally, I think there should be a minimum gas mileage requirement for the newer cars stated up front. Was she too lazy to look up the Federal mileage requirements?
In any case, I suspect it’s the bill that’s a clunker. I highly doubt it will get through Congress – and the White House.
ADDENDA:
First, this is a VOLUNTARY bill. They’d basically be offering people $2,000 on a new car in return for their old car. If you think your old car is worth more than $2,000, you do NOT have to trade it in.
Second, this will NOT mean the sudden death of every old car. First, many are already worth $2,000 or more. Second, not everyone can afford a new car, even with $2,000 down. Third, like the digital cable boxes, I suspect there will be a limit to how many cars are involved.
Third, yes, this bill obviously covers light trucks and SUVs.
Fourth, now that Americans have forgotten about gas prices again, any ecological or national-security advantage of this program will be minimal.
Fifth, I repeat that I find this program absurd. In other countries where it has been successfully implemented, people bought cars made by their own companies. In Germany, most people drive German cars. In Italy, most people drive Italian cars. In France, most people drive French cars. In Japan, most people drive Japanese cars. In America, most people drive foreign cars.
This law will not have much of an economic boost to Americans unless it covers ONLY cars engineered within the United States, but the cowards in Congress, of both parties, will not do that. For one thing, we have a group of senators who are so focused on the Civil War that they believe the Japanese are more American than Michiganians. For another, even though many in Congress yelled and screamed that we should not care about any other countries when it was about occupying Iraq, they seem to roll over and shove their paws up in the air when it comes to other countries getting mad about free trade violations. Even countries like China, who are hardly innocent of manipulating their own trade.
If this law comes to pass, it will greatly benefit Japan. It will NOT benefit the Detroit Three very much… unless Americans rush out to trade in their old beaters (quite probably their old Focuses, Cavaliers, and Neons) for new F-150s, Silverados, and Rams.
Is this just cars or does it apply to light Trucks too. While not a 1998 my 2000 Dakota, which I love and would have a hard time parting with. HMM “WHEN THEY PRY THE KEYS FROM MY COLD DEAD HANDS”
only gets, by EPA ratings 17mpg. Is this going to be manditory? Or voulentary? Is Ms. Feinstein, going to loosen the purse strings on auto loans? When will we stop letting Washington legislate our freedoms away?
Rudy, of course it’s voluntary. How could it possibly be mandatory? Nobody’s going to force you to give up your truck; just provide an incentive. I understand the idea if it’s geared towards people who don’t have the money to move into something with better mileage. I think it’s a bit nutty as it’s written now because if you have the cash for a $45,000 truck, a $3,000 addition isn’t a stimulus. It’s a tax break for someone who doesn’t need a tax break at a time when the country is deeply in debt due to far too many tax breaks for people who don’t need them, boneheaded “stimulus” packages, and unrestrained spending… much of which seems to have gone to pork, crooks, and things nobody needs or which could have been done far more cheaply and efficiently.
(Look at the first major purchase by DHS… a Microsoft site license. Think about it – what are the chances they needed one? How many new jobs were created by pushing together existing agencies?)
Dave, you’re right about this bill being flawed in many ways. I’d rather see the enhancement of existing tax incentives for people who buy more fuel efficient, alternative fuel, and/or less polluting vehicles. To me, the carrot almost always works better than the stick. States can add to the incentives by waiving sales tax, registration fees, etc., to sweeten the deal for those that buy the “right” vehicles.
Agreed. Or they can just put on a slowly increasing gas tax which would give people plenty of advance notice, and use that tax to fix the bridges and tunnels that are slowly rusting/rotting away. (Exempting biofuels.) However that would not stimulate the auto industry at all.
THe 2010 and 2011 models WILL stimulate the industry…
Here in Mass. they’re considering raising the gas tax in the short-term from 21 cents a gallon to 50 cents a gallon to cover this year’s budget short-fall for the Mass. Turnpike and the $15B+ “Big Dig” project (which has already become an expensive maintenance nightmare). The other alternative is to raise tolls significantly for those that actually use those roads. Some think that is an unfair burden on a small segment of the population that uses those roads to commute to work. I, on the other hand, don’t want a statewide 29 cent a gallon gas tax increase because, like 80% of the states population, I very rarely use the roads in question. The toll increase would undoubtedly spur more people into using public transportation and car pooling. This could only help the air quality in downtown Boston by getting more cars off the roads….not to mention reducing the parking nightmare. The upside is that it would also help reduce the $9B deficit the mass transportation system has on its books through increasing ridership.
I also fear that a 29 cent a gallon state tax increase is going to be soon compounded with a federal gas tax increase of at least 10 cents a gallon that is being kicked around. Ouch! I also believe that $1.67/gallon gas will all too soon be replaced by $3+ again within two years. Add another 39 cents to that and we’d be back over $4 a gallon. Not good for an economy that’s still on a down swing. Massachusetts is still losing jobs to other states because of the high cost of living and high taxation. Additional job loses because of the economy compounds that. Not a pretty picture locally.
There are no easy answers and none of the choices look appealing. That said, neccesity is the mother of invention. Hopefully high fuel costs means alternative energy solutions will appear on the scene more rapidly. That’t the theory anyway, right? We can’t beat a path to clean energy and total independence fast enough, IMHO!
First off, how do you decide who needs a stimulus and who doesn’t? …and how did you determine that too many tax breaks have gone to too many people “who don’t need them”?
The top 54% of wage earners pay 100% of the income taxes. This built-in assumption, pitting ‘rich’ versus the ‘regular guy’ is what leads to tax breaks for people who aren’t paying taxes at all (aka welfare).
Creating phony enemies is a great tactic. You are now on board with ’soaking the rich’. Once you’ve agreed to the concept that it is OK to reward people or punish people based on income, they’ve won. What do you do when they decide that you’re rich?
I favor equality. Equal taxation for equal representation…not establishing a narrow clique of people who decide what is enough or too much, or whether I really need a V8 in a 2 door passenger car or not.
Which brings me to point 2 – what prevents it from becoming mandatory? Low flow toilets started as a good idea, now you can go to jail if you install a 5 gallon toilet in some jurisdictions. Selling them is a crime. Once they start a program to use our tax dollars to buy older cars, what stops them from putting restrictions on older cars or banning them outright because they don’t meet modern emission standards (or requiring updating emissions equipment)?
These things are done incrementally. They start an innocuous, well-intentioned program to encourage people to replace old cars with new cars. Then they penalize those who don’t participate. Then they add restrictions, making it difficult to hold onto older cars.
Nevermind salvage yards go out of business. Nevermind you’ve raised the cost of low-end vehicles for the poor (reduced supply increases prices), pricing some people entirely out of vehicle ownership (this is fair?!?!).
Ah, but there should be exceptions for certain cars, right?
Here again, we are annointing a small group of people to decide what is worth saving, and what should be junked. We like American cars. Some people like imports. Some people like rotaries, some don’t. Some people like to buy junkers and restore them. Beauty is in the eye of the beholder.
Of course, once you tacitily accept the concept “old cars are bad cars”, you’ve lost. Eventually, they will call the shots and you’ll have no more influence which cars are banned than you did in any of the bailouts.
Finally…how in the world is it the responsibility of the Federal government to encourage people to replace their cars? Under what moral system is taking money (taxes) from a mother who can’t afford to send her daughter to college, and giving that money to somebody who already has resources to buy a new car, right and good?
This is the fundamental issue…the money isn’t the government’s. Tax money belongs to the people who earned it. We don’t know their circumstances. Maybe a family earns a lot, but have 6 adopted kids. Maybe they make a decent wage, but want/need to care for their parents. Every situation is unique, and using Federal money like monopoly money for a ‘good’ is only half the equation…where did the money come from, who earned, how would they have used it? Then you can decide if it is ‘good’.
Maybe some are rich…any maybe they would have donated to Habitat for Humanity, the Nature Conservancy, or the Christian Children’s Fund. Any one of those charities is many time more worthwhile than a $3000 discount on an automobile. Given that less than 50% of tax money goes for its intended purpose (bureaucracy and posh DC offices costs money), we also know those $3000 discount/rebates will cost over $6000 in tax money, each.
Yes, the Big Dig may have been insane and foolish, but what’s done is done. Blaming the politicians who did it is only useful insofar as they get (or got) voted out. Like certain national boondoggles that left us in deep debt, though, the question then arises, “where do we go from here?”
I’d argue it should not be one or the other; a smaller gas tax pus a toll would, IMHO, be the best approach I can think of. Or they can declare bankrupcy… isn’t that what the Senators say people should do?
Brian,
“First off, how do you decide who needs a stimulus and who doesn’t? ”
Well, the question is how do you direct the minimum amount of money to do the maximum amount of good. Not “need” because most Americans don’t NEED a car, a house, etc. Just an apartment and food. The goal is to push people over the edge into that purchase they were holding off on. If that’s your goal.
I think we could use less consumption in general.
“The top 54% of wage earners pay 100% of the income taxes. This built-in assumption, pitting ‘rich’ versus the ‘regular guy’ is what leads to tax breaks for people who aren’t paying taxes at all (aka welfare).”
The top 54% is hardly “rich.” I think it says a lot, if your figures are true, that 46% of the population is so poor they don’t pay any income tax. (We won’t get into the payroll tax, which as I recall is around 13% of income unless you start earning lots of money. Then most of the payroll tax stops. It’s one of our few truly regressive taxes; the poor are taxed at a higher rate than the rich.)
Perhaps we should make everything “fair.” Everyone, from you and me to Bill Gates and Steve Jobs, will pay the same amount. THen the top 1% of earners will pay their fair 1%. Of course it’ll be rough on those who make minimum wage and end up paying all their salary in taxes, but they should have known better than to make minimum wage.
In 1997, the median household income was $50,000. As I recall, people start paying taxes far below that level. I wonder about your figures. Only 20% of American households earned less than $19,000, and even at that level, I believe income taxes are due.
Of course, if you look at individuals, you can make the figures change a lot, since most people file as a household. Also, if you include children and retired people, you can make the figures change a lot. Maybe then 54% don’t pay tax.
Some of the 1% or so of the population that makes over $300,000 per year may be in trouble, but I’m a bit more concerned with the 20% of households earning less than $19,000. Call that a value judgement; WWJD? (I’m unaware of any four-character acronym belonging to other religions with similar meaning, but most of ‘em have some sort of guidelines for prioritizing.)
“Here again, we are annointing a small group of people to decide what is worth saving, and what should be junked. ” Yes, we should have thought about that before we established a government. Perhaps anarchy would have been superior. No, wait, we tried that. (Well, we tried a really small, weak government, and gave it up.) Perhaps we should have done a sort of Scandinavian-style vote-on-everything democracy… oh, wait, they stopped doing that and went to representative government. And some serious socialism.
If you’re going to have a few hundred million people to govern, you can’t put everything up to a vote. Much as I’d like to. In addition, just to point out:
1) Slippery slope and domino-theory arguments are a logical fallacy. I remember science fiction that predicted the EPA making people give up anything more advanced than a shovel…
2) This is a proposed law that probably has little chance of success. I personally think it’s silly the way it’s written.
3) Low flow toilets are a law for a very good reason, and I’m not going to argue with you about it. It’s a matter of survival in some parts of the country. Where, incidentally, you’re also not allowed to water your lawn. Of course we COULD all insist on our personal liberties, and then move after we’ve made California into a barren wasteland.
4) ” Tax money belongs to the people who earned it. We don’t know their circumstances.” Oh. Well, I guess I can withdraw any money that’s going to things I don’t believe in, like occupying Iraq. I’ll continue to fund armored vehicles and VA hospitals, though. But I don’t want to support the National Endowment for the Arts, so I’ll deduct that amount. And I don’t believe in medical benefits for the White House or Congress, so I’ll deduct that, too.
5) “Maybe some are rich…any maybe they would have donated to Habitat for Humanity, the Nature Conservancy, or the Christian Children’s Fund. Any one of those charities is many time more worthwhile than a $3000 discount on an automobile. Given that less than 50% of tax money goes for its intended purpose (bureaucracy and posh DC offices costs money), we also know those $3000 discount/rebates will cost over $6000 in tax money, each.”
Perhaps. Habitat builds houses, which is nice but I can’t help but think apartments are more efficient and desirable from a societal point of view. Nature Conservancy… okay. CCF… haven’t investigated. I disagree with your blanket statement that 50% of all tax money is always wasted, though it seems to be true for the rebate checks so loved by Republicans (a statement made on the basis of New Jersey governors and G.W. Bush).
My personal feeling is that all this stuff is rubbish – I think we actually agree there – my opinion was that IF this law was to be passed, this is how it should work. I think it’s a silly law that shouldn’t be passed. To me, the ideal stimulus involves putting people to work directly, not welfare, not donations to huge charities that have their own bureaucracies (smaller charities seem to be more efficient, in my personal experience, with less overhead). The works of the WPA are largely still in use… and with bridges, tunnels, etc. falling apart across the country and a rail system that is laughable compared to just about any other industrialized nation, forcing people into inefficient and inconvenient planes for even short hops, there’s plenty of work for people to do. Problem is, the previous administration(s) took a projected surplus and turned it into the biggest deficit of all time.
I think it is incredibly arrogant and elitist of anyone to assume they know better how to spend somebody elses’ money, than the person who earned it.
Again, once you decide it is the proper role of government to decide the best allocation of resources, you won’t have much to say when they come knocking on your door to take your cars and shove you in a shoebox apartment, because they decided that is all you need/deserve.
We should seek equality in opportunity; not in outcome which must be left to people and their own initiative.
Selective use of tax dollars? Nobody is advocating that, but I do advocate restricting government to its proper constitutional role. Making life fair and safe (like prematurely mandating air bags which killed lots of kids) is not the role of government. In fact, my point was NOBODY knows better to spend my money, nor should they have a right to.
You seem to think you know better how to spend my money, but that assumes your making the decisions – you probably wouldn’t like how I would spend your money.
Actually, what has been tried and failed miserably is centrally planned economies like Cuba, the Soviet Union, North Korea, etc. – which is why China is abandoning it.
Obviously, we fundamentally disagree philosophically, which is fine. I just find it interesting you have an interest in a hobby that gratuitously wastes resources, creates pollution, and glorifies wealth. I find it interesting too, but then it isn’t totally at odds with my philosophy.
BTW, I was suggesting people pay the same %, not the same amount. Actually I prefer a sales tax, not an income tax, so people can control their own budget.
“I think it is incredibly arrogant and elitist of anyone to assume they know better how to spend somebody elses’ money, than the person who earned it.”
You’re darned right. Absolutely arrogant. How DARE government build roads, arm a military, buy tanks, and build court-houses with MY TAX MONEY. They should put EVERYTHING up to a vote. EVERYTHING. From pencils to rockets.
That is what you’re arguing, right?
“I just find it interesting you have an interest in a hobby that gratuitously wastes resources, creates pollution, and glorifies wealth.”
Yes, that IS interesting. Aren’t people funny? (I don’t see the “glorifies wealth” part of it. Not when a guy who drives a nicely restored slant six car to a show seems to get as much attention as a guy who trailers in a mint condition GTX.)
“We should seek equality in opportunity; not in outcome which must be left to people and their own initiative.”
Great idea. How do you plan to implement it?
“Actually, what has been tried and failed miserably is centrally planned economies like Cuba, the Soviet Union, North Korea, etc. – which is why China is abandoning it.”
Yes, and if you hadn’t noticed, the kind of laissez-faire capitalism you espouse has also been abandoned. As with so many things, the solution seems to lie in a balance between the extremes.
If it passes it signs a death sentence to all four wheel drive vehicles due to they get poor mileage ive got a 90 jeep comanche and a 98 jeep grand Cherokee and am not or going to give up the 90 due to its in like new condition and is almost old enough to get historical license plates on the truck