Cross-posted from Focus the Nation
Democrats in the House Energy and Commerce Committee have been very busy lately. They’ve been busy, that is, making ACES into what may become a completely worthless bill, in an effort to buy the votes of industrial state moderates in Congress.
A particularly painful example of this is the “cash for clunkers” arrangement that will spend as much as $4.5 billion in taxpayer money to subsidize the purchase of marginally more efficient new vehicles for up to one million drivers. This program creates perverse incentives, does not create cost effective emissions reductions, and is in effect a multi-billion dollar redistribution of taxpayer money to car manufacturers and new car buyers. The new cars don’t even have to be fuel efficient by any reasonable standards.
In the most glaringly awful example of this arrangement’s ridiculousness, someone trading in a large light duty truck for one that gets one mile per gallon better fuel economy (YES, ONLY ONE MPG!), is eligible for a $3,500 voucher toward their new vehicle purchase (YES, THAT’S THREE THOUSAND FIVE HUNDRED DOLLARS!).
This is ludicrous.
Even the least unreasonable part of the arrangement, providing a $4,500 voucher to consumers who swap out an old vehicle for one that is 10mpg more efficient, with a minimum efficiency of 22mpg (YES, ONLY 22MPG!), is an absurdly expensive way to reduce emissions and a waste of taxpayer dollars.
What does this mean in practice? I could swap out my Hummer for a Suburban and get $3,500 for it. Or, I could buy an old clunker for $2,000, then “trade it in” for my new car purchase, get a $4,500 voucher, and in effect save $2,500 for buying the same car I could have anyway.
To make matters worse, this bill discriminates against two classes of people: low-income people, who generally don’t buy new cars if they drive at all, and people who don’t use cars for transportation. Both of these populations are responsible for much fewer emissions than high-income people and drivers, respectively, and often people fall into both categories. This means this policy would take money out of low-income, low-emitting citizens pockets and put it into the pockets of higher-income people buying new cars, that only have to get a minimum of 22mpg, and the car companies that make these cars.
This is a perverse idea, and unless it translates directly to votes to pass a solid bill that manages carbon emissions, and I assume Mr. Waxman and Mr. Markey think it will, because I consider them smart men and shrewd legislators, it must be eliminated.
Alternatively, it could be done well by offering the incentive only for genuinely efficient vehicles, including provisions to be sure car buyers don’t take advantage of the perverse incentive to acquire a “clunker” just for the voucher, and providing some incentive for people who already choose not to drive.
For the record, my 1994 Toyota Corolla gets about 25mpg city and 35mpg highway, and I usually ride my bike to work.
Subscribe by Email!
Subscribe by RSS!
Share on Facebook
Solid. Every damn congressman in that committee should read this.
What’s that smell? Our federal government at work. Perhaps environmentalists should form a union. That might get the attention of a few of our elected “leaders.” The longer the discussion on this bill drags out the worse (environmentally speaking) it will be. Gotta save those auto worker jobs…
Just to clarify one point, under the proposed program you would not be able to buy a $2000 clunker and then immediately trade it in, at least not one from a junkyard if that’s what you’re thinking. Only vehicles that have been registered and in use for at least 1 year would be eligible.
http://www.usatoday.com/money/autos/2009-05-11-chrysler-gm-cash-clunkers_N.htm?csp=34
You could still try to exploit the program by buying a vehicle cheap that was already registered for the past year, but in that case the program is actually achieving its goal of getting a (slightly) less fuel efficient vehicle off the road.
Its interesting to me how these big corporate handouts get branded as “green jobs” and “building a new clean energy economy” and people in the climate movement just eat it up with a spoon. This is corporate welfare plain and simple. It gives billions to the very companies responsible for the climate crisis. Imagine what that money could do if were spent on public transportation and bike programs etc. rather then enriching climate criminals
This program does discriminate … the same way the housing subsidy and the mortgage restructuring discriminates against those that either dont have mortgages or bought houses within their means.
The program for once doesnt discriminate (yet!!) against the people who give the most taxes (you might call them the rich people). Poor people barely pay any taxes so they shouldnt worry about “their tax money” going to rich people. For a change a policy that helps the economy and is not a handout to poor or irresponsible people.
60% of individual federal income tax is paid by 12% of the people who make $100k or more.
http://www.irs.gov/taxstats/indtaxstats/article/0,,id=96981,00.html
J
Jay,
Thanks for your comment.
The only critique I’ll make is the idea that people who don’t pay personal income tax have no claim to government spending as “their” tax dollars.
While they may not pay for this handout to auto buyers/dealers/makers directly with income taxes they pay, they do pay by absorbing the opportunity cost of this government spending, which is other government spending.
If this money weren’t given away to automakers etc., it could be used instead for green jobs training, efficiency weatherization & retrofitting for low-income households, more teachers, better roads, or any number of things that would be enjoyed by many more people than will be the cash-for-clunkers rebates.
Additionally, all consumers in effect pay the income tax even if they do not technically pay income taxes to the IRS, as the cost of all taxes is passed on through the economy, so when anyone pays for a service – be it a haircut, an oil change or a lawyer – they are indirectly paying income taxes.