The basics are, the government is offering a credit to people who buy new cars that are more fuel efficient than the cars they are currently driving. The credit is applied as the payment for the trade in of their old car to a dealership. Goals are twofold:
1. Stimulate the economy by helping car makers recover from the recession.
2. Push americans toward more fuel effficient vehicles, trying to improve the overall efficiency of the US driving fleet.
Both of these are ideas I am pretty OK with. The economy needs some help and I am always in favor of reduced buring of carbon fuels. So far, so good.
However, there are two aspects of the program that bug me. First, part of the requirements of the program is that the dealership send the traded in car to a certified salvage yard for destruction/parting out. Second, there requirements/eligibility for the program is pretty weak, meaning the actual improvement on fuel efficiency isn't going to be that great.
Point 1: There are some used cars out there that yes, probably need to be off the road. However, there are a lot of used vehicles that are still practical, drivable vehicles for people. Part of conservation is using the resources we have to their maximum benefit. Don't throw out a pair of pants that has a hole, patch the hole. Don't throw away food that is still good, eat it for lunch tomorrow. By the same token, we should use cars longer and reduce the number of new cars on the road. Save energy and materials by not manufacturing so many new cars while we still have viable cars available.
This isn't well (or at all) researched on my part, so the tradeoff may be worth it, but I always wanted to place a moratorium (5 year? 10 year?) on new car sales in the US, just to give us a chance to "use up" all the used ones that are around, then start over fresh with new, higher efficiency vehicles.
Point 2: This is the part I really don't like. For different categories of vehciles, there are minimum MPG improvements that have to be met for a new purchase to qualify for the credit. You can qualify for a 3500 or a 4500 dollar credit. Bigger MPG improvement = bigger credit.
To get the 4500 credit for a car, your new car must be 10 MPG more efficient than your old car. That is good. I like this so far. Instead of 18 MPG, you have to get 28. That is a pretty dramatic improvement and goes where we need to be.
To get the 3500 credit for a car, the improvement only has to be 4 MPG. Well...it is improvement, but not too much. Not the real frustrating part though.
You move down the categories to Light Duty Trcuk (which, if I am reading everything correctly, includes the Yukon your "suburban neighbor who has never left the asphalt" bought to so they could have a big, cool, SUV. To get the credit, the new vehicle must have a MPG rating of 18. 18??? Seems like we don't need to be doing anything that promotes 18 MPG vehicles. Now someone can trade in their old SUV gas guzzler for a brand spanking new gas guzzling SUV to drive to work.
I'd have to research a bit more...there may be some more redeeming characteristics to the program that I am missing, but for now I am a fan of the idea, not necasarrily the implementation.
It also makes me sad to think that if I took advantage of this program, the wagon would get smushed. Maybe I can find someone to buy it for 4500 instead, althought the KBB is well below that and my little run ins with A. overzealous drainage ditches and B. the bumper of a ford focus have done nothing to improve the value. I'll have to think about it for awhile.
Thus ends Daniel's longest post to date.
yesterday on the way to tulsa we were passed by a Yukon XL Denali...which, aside from the slight identity crises, deserves the 3 words indicating big in its name.
ReplyDeleteThat said, im with you..good idea, not so sure about the implementation. Particularlty the scrapping the cars part. I suppose that as long as there is some provision to make sure they are scrapped in an efficient manner (recycled, as many parts reused as possible) it would help some, but It's hard for me to believe that for at least a portion of those cars it would not be more effective to keep using them.
and it seems kind of pointless to end up driving an 18mpg car...im not sure what a good low end number is, but im sure 18 is not it.
so, i have been thinking about this some more, now that it is all done. I have read or listened to a couple examinations of the environmental impact, and both said the benefits will be tiny at best. So, in that sense i stand by interesting idea, not sure it really works.
ReplyDeleteSo, it seems then we have to turn to what it really is, an economic stimulus. In that sense it obviously worked at putting 3 billion into the car industry...there are plenty of people way smarter then me who have all sorts of opinions on weather or not that is a good thing or not, so im not sure that i could ever really sort that part of it out.
So, then you can take it down another level to real individual people. This is where i start getting worried, and this really stems from my personal take on debt. Im not quite to the point of Dave Ramsy (all debt save a house is bad), but i do think we are a debt happy, and it seems we are over dependent on debt for fast growth, rather then being ok with slow growth. So, some percentage of the people who bought cars in the past few weeks would have any way, k, thats fine, i say you should have bought a used car instead, but whatever. Some people were on the fence and got a good deal. Some percentage of them had previously decided that they could not afford a new car, so they were not going to buy one, then over a few thousand dollars they suddenly decide they can buy a new car, go 30000 in debt and star chugging away an payments. Over the course of the loan 5000 is not going to mean much. Those are the people i worry about. On a personal level that is there choice, so...ok go for it. But back to a big picture economic level, all those people have reduced there long term ability to be positive in the economy (it seems to me), and we are back to a debt driven quick growth model.
mu $0.02
I just noticed this comment. I listen to Marketplace on NPR (business news for the rest of us) and i have to say that your take on it is a better bit of reasoning than most of what I hear about economics. I think I agree 100%
ReplyDeleteHowever, the writer/journalist/editor side of me has to critique starting three consecutive sentences with "So," (a little bit of language that I routinely put into my own writing then go back and say "Wait a minute, I don't need that "so," and DELETE)
All well.
BTW, Aptera is supposed to be out by the end of the year, maybe as early as october. I'm flying to S. California to buy one (not really, but it would be cool).
ReplyDelete