Image by New York Times
I can see Jim Kunstler's face right now - pursed lips and purple. All this because CNN has leaked out that a few congresspeople think giving cash incentives to buy cars is the way to get things moving again (pun) in the good ole U.S. of A. There are 2 plans; one is even billed as 'environmentally sound'. Jim, don't turn the page; others, only if you dare.Tax deductions
The first plan-o is getting an "above the line" deduction for interest and sales tax on any auto loan up to $49,500. But it doesn't stop there - if you borrow more, you can still deduct the interest and sales tax for the first $49,500. Of course, the super-rich need not apply; individuals making more than $150,000 or families making more than $250,000 can't get the benefit.
There are many things wrong here, enough to write a book about one would imagine. Start with the actual cash - it's only going to 'save' a car buyer around $1,300 on the purchase of a $25,000 car. Of course, you have to go heavily into debt to realize the savings... didn't we just play this game... and lose? Secondly, the gubberment is apparently going to subsidize whatever the car companies can throw at us; given their current state, I'm guessing something along the lines of a 1978 Vega is in the works, except that it will cost probably somewhere around... $49,500.
Cash for clunkers
Even CNN gets the joke here - they politely call this one "fleet modernization" - but they miss it when you suggest there some environmental goals in the package. the CFC program (pun) would give away thousands of dollars toward in vouchers towards the purchase of newer, more fuel-efficient vehicles; customers would have to put up some piece of junk to be scrapped not just resold. Supposedly, there are two benefits; ensuring that more efficient vehicles are purchased, and it prevents a glut of used cars on the market.
Like the first option, where can one begin. How many times can we say it; fuel efficiency is not the answer, conservation is. Barring the fact that this program seems ripe for rip-off (any junky car... c'mon!), the greed cred (pun) on this is nothing more than the wispy veil of getting the failed automotive companies rolling again. And that's no pun - that's a fact. CNN