Cash for Clunkers

Jim and Tomi Allison, WILPF Corporations v. Democracy Committee

April, 2009

Last fall Detroit auto executives flew into Washington to predict the imminent demise of the American auto industry absent an immediate bailout at taxpayer expense.  Congress and the White House swiftly obliged, with many billions of dollars in loans, and more to come.  All of that went to the producers, and nary a penny to those who would actually buy cars if only they were affordable.  The same economy that had trashed Detroit had also trashed them.

Call us trickle-up Keynesians, but it seemed to us more sensible to focus any tax-supported industry bailout on consumers and workers.  That is why we proposed a federal subsidy for the trade-in of one’s old car for a cleaner, more fuel-efficient one.  The old gas-guzzling polluter would go not to the used car lot, but straight to the crusher for recycling.  We would put Detroit back to work, and soon clear the fleet of less desirable cars.

Early this year both houses of Congress proposed legislation very similar to our proposal--legislation called generically “cash for clunkers.”  The used car lobby opposed this legislation.  We understand that the House proposal died, but the Senate proposal may still live as “S.247.  Title:  A bill to accelerate motor fuel savings nationwide and provide incentives to registered owners of high fuel consumption automobiles to replace such automobiles with fuel efficient automobiles or public transportation.  Sponsor:  Sen Feinstein, Dianne [CA] (introduced 1/14/2009).”  The bill has 3 cosponsors, and has been referred to the Committee on Energy and Natural Resources.

Such a bill, dead or alive, screams for attention because of an article by Jeffrey White published in the Christian Science Monitor on Friday, March 27, 2009 (p. 7).  Its headline reads:  “Fresh challenge for Germany’s car dealers:  too many customers.” Say what?  It goes on:  "Car sales soared 21 percent in February as government incentives sparked buying.”  That is the month when Detroit’s Big Three posted declines of nearly 50% in sales.  The Germans put a measly $2 billion into this program for the first 600,000 cars sold.  Italy and France have begun similar programs, and Britain is considering one.  Some German marques are giving their own cash bonuses to sweeten the deal, and Germany has just announced that it will raise the original cap of 600,000 cars.

Let us send the news to our government:  You have already shown that it does no  good to bury Detroit management under a mountain of money. Europe has a demonstrably better idea, and it is time to try it on us.

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