What the What? House Passes Bill to Give You Money For Your Gas Guzzler
The U.S. House of Representatives has passed a bill designed to put money into consumers’ pockets by offering a credit of up to $4,500 to trade in their gas guzzling cars to purchase new gas efficient vehicles. Let me rephrase that, the U.S. House of Representatives has passed a $4 billion automotive bailout bill hidden behind a measly tax credit that will end up costing consumers money and ultimately raise the price of used vehicles. I actually read the entire bill (only 22 pages) today, which I’m sure would put me in the minority among the Congressmen that voted in favor of it yesterday. This post is designed for the U.S. Senate, where the bills fate rests. Senators, let me break down H.R. 2751, the “Consumer Assistance to Recycle and Save Act” for you…
The following are provisions in the bill followed by my comments to the Senate in BOLD:
The legislation creates a one-year program that allows the Secretary of Transportation to authorize the issuance of an electronic voucher to offset the purchase price or lease price for a new fuel efficient automobile when the consumer surrenders their current gas guzzler.
Wow! This bill sounds too good to be true, it will help stimulate our dragging automotive industry by giving consumers an incentive to purchase a new fuel efficient cars all while being environmentally friendly. Your constituents will love you for this! Senators, please continue reading past the first provision of the bill, the devil is in the details…
Participating car dealers cannot resell the trade-in vehicle and must also surrender the title to the U.S. Government and transfer the car to an entity for disposal/shredding.
Really? Participating dealers have to sign over the vehicle to the U.S. Government who then in turn will crush the car into tiny pieces? I realize a lot of these cars being traded in are probably not worth a lot, but tell that to the person who waits for the bus everyday because he/she lost their job and couldn’t afford their car payments anymore. Why don’t you just crush these perfectly good vehicles in front of the hard working, now jobless, automotive workers in Detroit who made them?
Supply and demand is a concept that lets the market put a price on things based off the amount of consumers shopping and the quantity of products available. It’s just a guess, but when you completely eliminate an affordable class of used cars, the supply is down. Combine the now shrinking supply of affordable used cars with an economy set to recover in the coming years and you will likely have successfully raised the price of what used to be reasonable priced vehicles.
In order for a consumer to actually receive the credit, he/she has to purchase a NEW vehicle or lease one.
The bill is called a consumer assistance bill—what part of consumer assistance is encouraging people to take on debt all for a coupon off the purchase price of a vehicle? The last thing many households need right now is another note to pay off. The additional costs in buying a vehicle nearly equal the lousy credit. For example, taxes, fees, title, plates, and higher insurance are all expenses a new vehicle owner is strapped with. And I won’t even start on the economic downsides of leasing a vehicle. What was the main lesson learned from the mortgage crisis? Just because you can get the loan, doesn’t mean you can afford it. Just because the Government gives incentives to buy something doesn’t make it the “right time to buy.” Senators, you can’t fix the economy by encouraging people to take on debt, that’s what caused the problem.
A Consumer can get a $3,500 voucher for a new vehicle if the combined highway/city fuel economy of the new vehicle is at least 4 miles per gallon higher than the trade-in vehicle.
Wow, we are going to save the earth 4 miles per gallon at a time.
What are you thinking? 4 miles per gallon is nothing and is likely accomplished by simply not turning on your air conditioner while you drive. Why don’t you just write up a bill that gives consumers a $3,500 tax credit to make sure their tires all have the correct air pressure?
A Consumer can get a $4,500 voucher for a new vehicle if the combined highway/city fuel economy of the new vehicle is at least 10 miles per gallon higher than the trade-in vehicle.
Senators, let me remind you that the car dealerships have to crush the trade-in vehicle, meaning the consumer does not actually receive any money from the dealer for their vehicle like they traditionally would. Instead they are limited only to the amount this bill would give them. The last time I checked, a vehicle that gets about 10 miles per gallon better than their trade-in is expensive—that’s why nobody is buying the new cars and that’s why the auto industry is hurting.
In order to receive the credit towards a new car, the consumer would have to purchase a “passenger automobile,” which is defined as a vehicle with a combined fuel economy value of at least 22 miles per gallon.
OK, the environmentally friendly part of this bill is getting a bit humorous. Not only do consumers only have to improve their vehicle’s miles per gallon by about 4 to receive a significant credit, but they only have to purchase a new vehicle that gets 22 miles per gallon. 22 miles per gallon is horrible! Who lobbied for this provision? Let me guess, the auto industry?
There is authorized to be appropriated to the Secretary of Transportation $4,000,000,000 to carry out this Act.
Senators, you cannot fool the voters, this is clearly a $4 billion bailout package for the auto industry, which is basically now owned by the voters and ultimately will be returned to the industry, who will profit.
H.R. 2751, the “Consumer Assistance to Recycle and Save Act” should ultimately be renamed to something that more accurately defines its contents, like the “Consumer Disservice to Waste and Overspend Act.”
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Comments
There is so much about this bill that disturbs me, I can’t even process it all. Of course, that can be said about 90% of the Government Programs rolling around right now. I believe we, as a country, have allowed things to get so bad by not stopping the ridiculousness that goes on with our political system, that we’re never going to be able to recover.
I have a few comments that I hope make sense. The first being, why does the gvt have to pursuade people to buy cars at ther present value. If you look at your basic supply and deman curve you will see that when deman goes up and supply goes down – your cost will go up. Or like now, when demand goes way down; and supply is through the roof – COST SHOULD COME WAY DOWN! as it has on used vehicles.
Lets take an example. If I trade in my old pickup for a new car. I will get $4,500 if I buy a brand new fuel efficiant (22MPG) car. Typically when you buy a new car and drive it off the lot, it declines in value tremendously. So not only did i trade in my trusty old pickup for a $25,000 car now costing me $20,500 or about $315/month.
How about this. Instead of “taking advantage of this credit” I keep my pickup – or sell it on the open market, for face value, lets say $2,000 and find a used vehicle that has followed the laws of supply and demand. You can find amazing bargains right now on minamally used vehicles. For instance I am pretty sure “Frank” bought a 2003 dodge neon for $3,500 with only 56k miles. And I am sure this car gets more than 22MPG. So you not only got $2,000 for your truck – you sold it to someone who needed it – and your 2003 “new” car only took $1,500 out of your pocket. Sounds like a good deal to me!
My point follows Franks – do not over extend your limits. And also do not judge a book by its cover.
@Imee: It is abhorrent to me to think that I would sign over my vehicle and get a little bit of money just for a few more gallons per miles saved. To sign over my perfectly running vehicle to the government so they can simply destroy it while I spend good money on a “new” one gives me chills.
This is important that you and other environmentally conscious driver need to have clear in your mind: Until there is a vehicle that gets AT LEAST 100 miles per gallon…any car you get is going to be problematic to the environment. And yes that does take into account the millions of cars out there.
There is a difference between “embracing change” and not thinking clearly. Not every new idea for “moving forward” the gov’t pumps out is a great one. Let me know if you need examples.
Don’t get me wrong, I am all for saving the trees, but lets not lie and have hairbrained bills passed just to spur some auto industry stock activity, (now that the gov’t owns a hefty amount.)
I think this is a great incentive. For one thing, gas guzzlers can cause harm to the environment and to our health. And second, if we don’t embrace change, we won’t be able to move forward.