Beater exchange

Congress has yet another half-formed, or half-baked, idea:

Under legislation introduced Wednesday in the House and Senate and called the “Cash for Clunkers” program, drivers could get vouchers of up to $4,500 when they turn in their old fuel-inefficient vehicles for scrapping and buy vehicles that get good gas mileage.

The bill, said Sen. Dianne Feinstein, D-Calif., “would be an important part of helping getting America’s struggling automobile industry back on its feet.”

Taking gas guzzlers off the road, added Sen. Susan Collins, R-Maine, a co-sponsor, “would stimulate the economy.”

Why this won’t work:

Drivers would be eligible for reimbursement for purchase of a new or used vehicle with a fuel economy rating that exceeds federal targets for that class of vehicle by at least 25 percent. The vehicle must have a manufacturer suggested retail price of less than $45,000 and be a 2004 model or later.

Someone who’s driving some old Hunk O’ Junk is highly unlikely to be able to snag a new fuel-sipping vehicle at all, even with $4500 in hand: even the lowliest Chevy Aveo starts on the far side of $10k. And if he buys used, the auto industry benefits not a whit.

Besides, the people who will need this the most will inevitably get the least:

In the first year of the program, a person trading in a vehicle that is model year 2002 and later would be eligible to receive $4,500 for purchase of a new vehicle, $3,000 for purchase of a used vehicle or $3,000 for transit fare credit. For model year vehicles 1999 to 2001, drivers would get $3,000 for the purchase of a new vehicle. Those who trade in vehicles that came out in 1998 or before could get a credit of $2,000 for a new vehicle.

The Germans have a marginally-better idea:

The Federal Government of Germany has decided to offer something never seen before in the country: €2,500 cash when you purchase a new car, as long as you also get rid of a car which is at least nine years old and has held a German registration plate for at least six months. The measure is designed to help Germans to get rid of old cars, since 3.8 million vehicles that are between 16 and 25 years old are still being driven.

This plan has the benefit of simplicity, at least. Congress could never come up with something like that: they’re too emotionally wedded to the concept of Questionable Optimization, as any perfunctory glance at the tax code will instantly confirm.


  1. Kay Dennison »

    17 January 2009 · 8:34 pm

    I love my Miss Ruby, she’s pretty fuel efficient even in the city. AND I simply can’t afford a car payment. However, she is 7 years old and I worry about the expense of car repairs. I’m trying to figure out how I can make this work for me.

  2. CGHill »

    17 January 2009 · 9:00 pm

    Gwendolyn turns nine this year; I’m hoping to get her to the 200,000-mile mark, which at my present rate of driving will take seven and a half more years, at which time I really don’t expect there will exist (1) a sedan with 100 cubic feet of interior space (2) that averages substantially more than 21 miles per gallon (3) that I can possibly afford to buy new (4) that I can reasonably expect to last 200,000 miles.

  3. Andrea Harris »

    17 January 2009 · 10:29 pm

    I shall keep my little green Tercel, which turns 14 (!) this year, until it rusts around me. It’s still running (cross fingers) and being a stick gets good gas mileage. In fact, I think its mileage is close to that of a new Prius. (I’ve checked and done comparisons.) Best of all? It’s paid for.

  4. CGHill »

    17 January 2009 · 10:36 pm

    If you have the four-speed stick, the Monroney sticker said 33 city, 39 highway. (The 5-speed was 31/39.) Close enough, I think; baseline figure for the Prius is 40 or so.

    My last Toyota made it to age 20 with very little corrosion.

  5. Mark Alger »

    18 January 2009 · 9:44 am

    What I find marginally terrifying is that someone, somewhere in the organization responsible for this notion, heard the terms of the offer and thought to himself, “Yeah. I’d go for that,” and thereby found it worthy of support.

    Politics: the game for people too stupid to get real jobs.


  6. CGHill »

    18 January 2009 · 11:20 am

    Incidentally, the European Union is not playing the bailout game:

    “There is no guarantee that all the main European manufacturers can survive the crisis,” [EU industry commissioner Günter] Verheugen told BBC radio. Translation: don’t bank on a bail-out. If you get in trouble, you’re on your own.

    Make of this what you will.

  7. Charles Pergiel »

    19 January 2009 · 10:28 pm

    It sounds like a perfect political solution. The bill sounds good, but actually changes nothing. A good days work for Congress. They didn’t actually screw up anything important.

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