I don't want to steal someone else's idea, but unfortunately I can't remember where I heard this, so I can't give proper credit*. Anyway, I like the idea enough to put it out there without giving it much thought--Instead of bailing out investing in innovative technologies for the Big Three U.S. automakers, how about subsidizing consumers for the purchase of fuel efficient vehicles from U.S. manufacturers. The current talks are for about $16B is bailout money. Instead of giving that to the inept short-sighted management of GM, Chrysler and Ford, how about a direct payment of $10,000 to anyone who replaces a fuel inefficient car with a U.S. manufactured car that gets over 35 mpg.
I know, what you're thinking: "They don't make enough cars that get over 35 mpg."
What do you want to bet they would figure out a way if you tell them the government is offering enough money for 1.6 million cars.
Now, what to do with all the old cars?
Sheesh, I'm still working on the details.
*If anyone wants to take credit for originating the idea, I'd be glad to give you your due.
What a stupid idea. Gas is getting cheaper and people don't want small cars. Bribing them to buy small cars with my money is wasteful.
If you want small cars on the roads then keep gas prices high with taxes. For every dollar of new gas tax revenue, decrease the income tax one dollar to offset the new tax making it neutral.
This will shift the tax base from regressive (on income) to progressive, (on negative exteranlities).
You are definitely a consumer with a job, not a thinker with an occupation.
Posted by: Jim | December 08, 2008 at 11:47 AM
What a stupid idea. Gas is getting cheaper and people don't want small cars. Bribing them to buy small cars with my money is wasteful.
If you want small cars on the roads then keep gas prices high with taxes. For every dollar of new gas tax revenue, decrease the income tax one dollar to offset the new tax making it neutral.
This will shift the tax base from regressive (on income) to progressive, (on negative exteranlities).
You are definitely a consumer with a job, not a thinker with an occupation.
Posted by: Jim | December 08, 2008 at 11:48 AM
Hmmm...I must be on my game today. My ideas have been called stupid twice.
Jim,
1) I'm an advocate of higher gas taxes (see my post immediately before this one).
2) The Big 3 are claiming a need for bailout money so they can retool for production of smaller cars. My point is simple, if we are going to mandate smaller car production and hope (upon hope) that people will buy them to save the U.S. auto industry, then let's not give the money to the poorly managed companies. Instead, give it to consumers and guarantee that they will buy what is being produced.
3) My real solution to this problem is: Let them go bankrupt. Sure it will be hard in the short-term, but more efficient (and better cars) in the long-run. But if we are going to bail them out, how about letting the consumers decide rather than the same execs who got them into this mess.
Posted by: Tim Haab | December 08, 2008 at 12:12 PM
And for those of us already responsible enough to drive fuel efficient cars just miss out on the whole deal?
"anyone who replaces a fuel inefficient car with a U.S. manufactured car that gets over 35 mpg"
Perhaps anyone who buys new a US manufactured fuel efficient car should get the discount.
Posted by: Skylar | December 08, 2008 at 12:37 PM
Skylar:
And for those of us already responsible enough to [fill in your favorite government paternalistic desire here] just miss out on the whole deal?
Tim
Posted by: Tim Haab | December 08, 2008 at 12:52 PM
I didn't mean to call tour idea stupid twice, I only meant it once. Maybe a pushed the button twice, oh well.
I like your real solution, it is much more practical. Giving away money is a waste of taxpayer resources.
Here is what I see as a solution. Their cash flow will force them into bankruptcy, that will give management the ability to renegotiate union contracts. Legacy costs on a union built auto are $2000, that is $2000 more that Toyota and the the rest of the worlds car makers can pack into their cars while selling at the same price point.
Ford, GM and Chrysler are not poor at building cars. If you look at Ford's line compared to Toyota's line of cars they almost mirror each other. The difference is the $2000 of legacy costs, that is what skews buyers decision, the Toyota has more options and luxury features for the same money.
The UAW is responsible for this problem, granted the big-3 succumbed to their demands and that is really the only thing the big-3 did wrong. US auto manufacturing is alive and well in the right to work states in plants with Mercedes, BMW and Toyota signs in front.
The auto industry is an international thing now. It is wrong to align a company with a nation, it has not worked in that way in over a generation. I drive a Toyota, it was built with parts sourced from all over the world, assembled in Canada and sold and serviced in the US.
Posted by: Jim | December 08, 2008 at 01:07 PM
Google "ecoauto". IDK who started the idea but it was tried by Canada's pro oil-sands government for a year and then promptly cancelled for unrevealed lobby reasons. The rebates were only set at $1000.
I agree it might not be worth bailing out big cars to see Volt realized. Consumers were generally given the same teaser car loans as sub-prime customers were, to my knowledge. I'd rather put the money in the much employment intensive wind turbine supply chain. Michigan has offshore wind coastline.
Posted by: Phillip Huggan | December 08, 2008 at 03:40 PM
Why buy a car at all? Why not just give 10,000$ to everyone in the county?
You half measure Clintonian neo-liberals are pathetic.
The great "Milton" went over this whole thing decades ago.
Posted by: joshua corning | December 08, 2008 at 05:54 PM
Geez, first of all, the big three make a huge number of cars that get over 35 mpg, they just don't make OR sell them in the US, for example the Ford Fiesta UK diesel which gets over 60 miles per imperial gallon Since economists are so well paid, you do the conversion, but it is still a lot more than 35 mpg (US). As a matter of fact try and buy one of these in the US, and it ain't the emission standards that keep them out.
Second, what will happen with the old cars is the same thing that happened with the gas guzzlers of the 60s, they get sold and get old old and get scrapped. The few that survive and are driven and polished by 50 something guys turn heads on the street and get smiles from us 60 something guys.
You could have a program to take the worst out of circulation, but experience shows that everyone with a hulk in the yard would roll it down to the impound lot for a couple of bucks.
After but a brief acquaintance the second point appears to be but another Haab herring dragged across the screen to distract.
Posted by: Eli Rabett | December 09, 2008 at 10:10 AM
Eli,
Nice guys finish last!
Tim: I'm convinced that all of these guys calling you stupid are your friends from high school.
Posted by: John Whitehead | December 09, 2008 at 10:02 PM