Auto clunker plan is a lemon

        Even Hummers are eligible for purchase under the clunker program
        (AP Photo/Mark Avery)

The U.S. Senate approved the so-called "Cash for Clunkers" plan yesterday as part of emergency war funding legislation, following similar action by the House a week ago, and President Barack Obama has indicated that he will sign it.

A splashier headline would have been, "Clunker bill is a clunker," or "A clunker of a clunker bill," but I discovered other writers had gotten there first.  So I'm stuck with a lemon.  But make no mistake about it, this program will prove valuable to thousands of auto buyers across the country, even as it fails to fulfill any meaningful national objective.

This ill-conceived, ill-begotten plan does nothing to advance the causes of environmentalism, alternative energy or climate change.  Nor does it broadly or fairly provide relief to businesses and individuals suffering under the protracted and severe recession.  But it does carve out the auto companies and a fraction of the car buying public for $4 billion worth of goodies.  No doubt, many will take advantage of the provisions in the bill, but it probably won't come close to producing sales of a million units that some in Congress are crowing about.  Funding for the bill comes from the $787 billion stimulus package, itself a confused jumble of half-hearted measures so watered down and compromised that it is virtually certain to have little impact on the recession in the short term, and none on the economy over the long haul, where we so desperately need serious investment.  The opportunity of a half century, squandered and frittered away by Congress.  This government is no FDR II.

The program provides new car purchase vouchers from $3500 to $4500, and can be summarized as follows:

The clunker:  Must be model year 1984 or later, registered and insured by the owner for at least one year, with rated mileage of 18 mpg or less.  Dealers must ensure that the clunker is hauled away and crushed, so it has no trade-in value.  

The new car:  Must cost $45,000 or less (MSR), be rated 22 mpg or more to qualify for the $3500 voucher, and 10 mpg better than the old vehicle for the full $4500.

The new SUV or pickup truck:  Must cost $45,000 or less (MSR), must obtain 2 mpg better than the old for $3500, and 5 mpg for $4500.

For heavier trucks:  See this article.

Note the one year ownership requirement - you can't acquire a junker and trade it in.  Moreover, the wholesale trade-in value of your clunker will be lost, as the vehicle is to be destroyed, not resold.  Finally, used vehicles are not eligible for purchase.

It's clear from these sketchy details - I have not been able to obtain a copy of the actual legislation - that the bill is primarily a subsidy for the swapping of old gas guzzling SUVs and pickup trucks for new gas guzzlers, as evidenced by the charitable rules above, compared to the more restrictive condtitions for old-to-new passenger car trade-ins.  A sensible program would encourage the purchase of fuel efficient vehicles, so presumably Congress had some other goal in mind when they created this, this, . . . this clunker.  Like it's just another piece of the bailout for Detroit.  But why subsidize the purchase of more gas guzzlers?  It's baffling.  

Even Hummers, the classic symbols of conspicuous American extravagance and waste, are eligible under the program. So much for environmentalism and alternative energy.  This effort amounts to nothing more than a means by which the auto manufacturers can profitably unload their unsold, voracious behemoths sitting on their lots onto our clogged highways.

But if it works for you, don't hesitate to take advantage of it. It's the perfect way to recoup that tax money of yours that they are wasting on this program.  Who says you can't have your cake and eat it too?