I was okay with the new car tax deduction. It didn’t offer a huge incentive to buy a new car or pose a big burden on the federal budget, but it was a nice bonus for people who planned to buy a new car anyway. Now the House of Representatives has passed a new “cash for clunkers” voucher program, AKA bribe, that is really making me stabby. There’s no telling if the Senate will pass it, but the very idea makes me so stabby that I nearly have the vapors. Someone get my smelling salts.

Cash for Clunkers = Bribes for Getting New Cars
The bill purports to offer an incentive for people to replace their old gas guzzlers with new energy-efficient vehicles. The House defines a gas guzzler as anything getting less than 18MPG. I can completely agree with that – that’s really bad mileage and I can understand people wanting to get rid of them. That’s not the part that makes me stabby.

This is: a “fuel-efficient” car is anything that gets over 22 MPG! 22! And the bonus for gaining a measly 4 MPG? $3,500! If you’re really bold and improve your gas mileage by 10 MPG, you get $4,500.

But wait, there’s more. That’s for standard passenger cars, not SUVS, trucks, or minivans.

Someone hold me back, I’m about to rip my hair out.

If you own an SUV, truck, or minivan that gets less than 18 MPG, you can earn a $3,500 voucher for buying a new SUV that does 2 MPG better. Yes, that’s right, choose an SUV that improves your gas mileage by TWO miles per gallon, and you get $3,500.You get the full $4,500 by buying an SUV that gets an extra 5 MPG.

And if you’ve got a really heavy truck, you only need to improve by ONE MILE PER GALLON.

I think I’m going to cry now.

This is Not about Fuel Efficiency
If the government was really concerned about encouraging people to buy more fuel efficient cars, they have a few options:

  1. Establish the Cash for Clunkers program with minimum improvement requirements of 15 MPG. That would require people to buy cars with a minimum mileage of 33 MPG. For those of you paying attention, that’s 2.5 MPG less than the new fleet-wide minimum CAFE standards that are mandated by 2016.
  2. Increase the gas tax. Want to see people flock to fuel-efficient cars? Make them pay more for gas. It worked when gas prices shot up, it would have a more permanent effect if the base rate was always higher.
  3. Levy additional taxes on gas guzzlers. It’s simple – want to buy a Hummer? Pay a sin tax at purchase. $3,500 sounds fair.

Why This Makes Me Stabby
The House of Representatives wants our government to spend $4 billion to fund this program that will do very little to improve fuel efficiency, reduce our gas use, or reduce our impact on the environment. It’s basically designed to sell all those cars sitting in dealer lots right now so they can start making new ones. How about they just cut the price instead of asking the government for more hand-outs? Reducing the price by $4,500 would do a lot to help move those cars and taxpayers wouldn’t have to get involved.

Potential Upsides
This bill does have potential benefits. I can think of two:

It will stimulate the auto industry. This particular bill doesn’t support any specific car company, in fact it might help foreign automakers more than US automakers. Although you could argue that some fuel-efficient Toyotas and Hondas are built in the US, so they’re American cars anyway and are saving American jobs.

It will get those older, less efficient cars off the road. Once traded-in, the engine, transmission, and some other parts will be destroyed so the cars don’t return as used cars.

Those benefits are not enough to outweigh the downsides for me. I DO NOT support this bill. If you agree, it’s time to call or write your Senator. Urge them not to pass this bill. I will write my Senators just as soon as I stop screaming.

Comments

12 Responses to “That Makes Me Stabby: Cash for Clunkers Program”

  1. Funny about Money on June 15th, 2009 7:57 am

    Hee! I love it!

    Twenty-two miles per gallon. {snort!} My Sienna does better than that, and ten years ago the Mechanic from Heaven advised me not to get it because of the Sienna’s poor gas mileage!

    Here’s the plan: we get them to pay me $4,500 for keeping the van and restraining myself from buying a 1 1/2-ton V-8 pickup. That should save ten miles to the gallon, to say nothing of all the energy saved by not junking my car and not building the pickup I promise not to buy.
    ;-)

    Seriously: $4,500 off a $22,000 vehicle still leaves you $17,500 in the hole. That’s one heckuva lot more debt than I want to take on. The fact is, automobiles are now too expensive for most Americans to buy. There are two possible solutions: bring down the cost of cars to around eight or ten grand (max), or build decent public transportation, nationwide.

  2. Aryn on June 15th, 2009 11:55 am

    Seriously. Where’s my reward for having a 1997 Toyota that already gets 26 MPG/average?

  3. Carnival of Personal Finance #209 : Carnival of Personal Finance on June 15th, 2009 3:33 pm

    [...] That Makes Me Stabby: Cash for Clunkers Program [...]

  4. Bible Money Matters on June 16th, 2009 6:42 am

    That’s right – i want my check for my 25mpg sedan. When can I expect it?

  5. Christina on July 15th, 2009 1:55 pm

    So what happens if I trade in an old clunker SUV for a fuel efficient sedan? Does the $4500 apply to the, let’s say $10,000 Nissan Versa?

  6. Aryn on July 15th, 2009 4:14 pm

    Christina,

    The price of the new car doesn’t matter, just that your old SUV gets less than 18 MPG, you’ve owned it a year, and it’s in operation. You can replace an SUV with a car or an SUV or a truck.

  7. Saturday Staples: Cash for Clunkers : Yielding Wealth - Personal Finance Tips - Money Management Advice on July 25th, 2009 7:32 am

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  8. Paul on August 11th, 2009 6:23 am

    My 22 year old 19 MPG car gets me nothing if a buy a 30 MPG (more than 50% improvement) but if I had a truck that gets 18 MPG and replace if with something that gets 20 (a 11 % improvement) I would get $3500. Crazy!!!

    Simpler and fairer method would be percent improvement*$4500 with a $4500 max.

    Being generous I would say that the current law was just poorly formulated.

    Being cynical I would say that it was designed to preserve sales of high profit trucks, etc

  9. Erik on October 5th, 2009 7:35 am

    I’m just sick and tired of endless handouts to the irresponsible. Got yourself in over your head with a mortgage? No problem, Erik can pay for it. You wanted a big truck to drive around Suburbia in but realize now it’s not cool? No problem, Erik can pay for that too. You figure collecting unemployment is a fine way to ride out the economic downturn? ……(sigh)

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