A clunker of a bill
Do I have this straight? Democrats just passed a bill that will take $2B of money we don’t have from future ordinary taxpayers, and we will give that money as a reward to people who selfishly bought gas guzzling cars, most of whom are relatively wealthy SUV owners, so that our automotive industry can stay out of their second bankruptcy for a few more months? And the cars that are traded in must all be destroyed, instead of reused? Did I suffer a head injury and forget which party is supposed to screw the little guy and the environment to benefit the rich, or are they both just doing that now?
So, to summarize with an example: there is a shoe salesman in Mississippi whose grandchildren will be paying taxes so that some rich guy in Boston can be rewarded for trading in his Cadillac Escalade. I take this back. As Ken points out, rich people probably don’t keep these cars until their value drops below $4500. And take note, my voting friends, that a measure introduced to limit the cash payouts to only those below a certain income level was voted down by “The Party of the People” by a margin of about 2 to 1.
The crassness of this bill is only exceeded by the utter lack of efficacy. It takes some sort of talent to waste money so quickly and yet do so so impotently. At the end of the day, all of this will only be a drop in the red ink-filled bucket that is our automotive industry. This is the problem with spending government money on bribing consumers to spend on things they don’t need, instead of investing in capital projects. Either it works once or not at all, and in the long run both are about the same.
I just have one request of the small number of you who read this. Next election cycle, I don’t mind if you continue voting for Democrats. The Republicans have become such a joke that I can’t blame you. But please do me favor and quit being so damn smug about being a member of a party that has become nothing but the very slight lesser of two very big, stinking, corrupt evils. This Democratic-controlled congress is nothing which anybody with an ounce of integrity or intelligence should be proud to have elected.
My impression was that most cars being traded in are indeed “clunkers”, i.e. not high-value cars. I thought that was in fact a prerequisite for participation. Where’s your data coming from? I couldn’t find a complete list of eligible clunkers, but here (http://www.cars.gov/files/eligible.pdf) is a short list of newly-eligible cars as of July 24, and they don’t strike me as very luxurious.
What I can’t quite figure out isn’t why the Democrats are so gung-ho about the bill, it’s why the Republicans aren’t. I mean, we’re taking tax money, giving it directly back to people, and making them spend it in the Free Market. What’s not for an elephant to like?
I can’t find any official demographic data on who’s taking advantage of this program. I’m guessing there’s a reason for that. Poor people, unless they are exceedingly stupid, do not buy six and eight cylinder cars that cost a lot of money to keep in fuel. And they don’t have the money to buy a new car, either, which is perhaps the most important prerequisite for this program.
As for the update list: there are BMWs, Porches and Alfa Romeos. Even the lowly American brand cars are nice cars: mostly trucks and SUVs. I could only find a few crappy cars on that list. The car companies are stupid, but not so stupid as to put a V8 in a Ford Focus. If you think that list contains mostly low-end cars, you must live in a much nicer neighborhood than I do!
Anyway, to answer your question. I have no idea what the deal is with Republicans these days. But if they were true to their message, they would simply put the stimulus in the form of a tax break for everybody, not one that rewards the environmentally irresponsible by paying them to landfill their cars. And they wouldn’t focus on helping one industry, and certainly not one that is one of our weakest. In fact, if you could summarize most of the government efforts over the past year it would be this: subsidize failure, tax success. We throw money at the worst parts of our economy, and drain it from the best. That’s not a long term recipe for a sustainable recovery, that’s politics. I’ll wager you a venerable car-of-the-masses BMW M3 that GM will be back in bankruptcy within a few years.
As for the Democrats, if they really believed their platform, they should hate this bill. It’s a regressive tax rebate aimed at rewarding the over consumption of people who didn’t care about the environment, and it’s bad for the environment, itself. I can’t imagine Al Gore is happy about us junking perfectly good cars and building new ones to replace them. Steel takes a LOT of energy to produce. I think you have to admit that this is about the Democrat’s support of the UAW, wrapping in a thin veil of environmentalism.
Ken, I have a lot of respect for Democrat voters. Virtually all of my friends are Democrats. But as far as congress is concerned, your politicians aren’t much better than the Republicans they replaced. The main difference is who they are in bed with. Neither party is truly concerned with doing the best thing for the country, because there’s just no money in that, at least not at the Federal level. I’m probably with you in preferring Democrats at the local level, but congress is a mess.
I was actually basing the clunkerhood of the cars on that list mostly on their model years – a bunch from the 1980’s, and the newest (except for the 2-cylinder (!) Mazda RX-8) is from 12 years ago. To me, that’s just not the profile you’re painting above. As a rule of thumb, rich people don’t drive the same car for more than about 3 years.
Finally, remember that the maximum people can get for their clunker is $4500. People are jumping at the chance, presumably because the max they can get in the market for it is $2K or so, or more likely, $0. How many of your rich Bostonians are driving $2K Escalades?
You have a good point, Ken. While those are mostly cars purchased by well-to-do folks, I have to admit I can’t imagine them keeping the cars that long, either. I’m now a bit more mystified by the take-up on the bill (who the heck has a car worth $4500 who can afford to be buying a new car in this economy?) but at least it’s not as regressive as I thought it was. Still think it’s a bad idea and a waste of money, but that’s far less surprising.
I’ve been reading about a concept known as “creative destruction.” (Hint: it has nothing to do with demolition derbys) I believe Detroit’s time for such is at nigh: let the bastards die a good death for their remains will feed others who won’t be so beholden to the craptacular unions.
Secondly, unlike you, I have little respect for those who vote Democrat. Right below dastardly Republicans, they’re the absolute worst party, EVER. I greatly fear for my unborn son.
I’m a big fan of creative destruction. It’s supposed to be one of the nice corrective features of honest capitalism.
I respect Democrat voters because they often are sincerely caring people. The only thing I generally find fault with is their being naive enough to think their politicians aren’t crooks, and in thinking that just because something is a good thing to do it is a good idea for the government to do it.
Fred, you might support the clunkers bill then? (Not sure if you’re saying you do or you don’t.) According to the statistics it’s driving market share from large US-branded clunkers to smaller foreign-branded more-efficient cars. Which I suppose would hasten this “good death” of which you speak.
And it’s exactly the same over here in the UK. And guess what? The germans started this crazy trend !!!