BY: NCViking

The U.S. Department of Transportation unveiled a billion-dollar Car Allowance Rebate System program (or ‘Cash for Clunkers’) to help boost auto sales and get gas-guzzlers off the road. It is a program borrowed from Europe that has been successful in stimulating economic activity in their depressed auto industry so the hope is that it will work here. The idea is to trade in your old gas-guzzler for scrap and get up to $4,500 rebate towards the purchase of a new fuel efficient car. It is voluntary, provides incentives, stimulates economic activity and Greens get more hybrids on the road. It doesn’t discriminate to domestic-only vehicles (many of which historically are garbage), thus stimulating market competition for sales. I would much rather have the free markets ultimately sort all of this out over time, but as a means to give the economy a little kick, I can buy into this.

Here is what the government website has to say on the program:

• Your vehicle must be less than 25 years old on the trade-in date
• Only purchase or lease of new vehicles qualify
• Generally, trade-in vehicles must get 18 or less MPG (some very large pick-up trucks and cargo vans have different requirements)
• Trade-in vehicles must be registered and insured continuously for the full year preceding the trade-in
• You don’t need a voucher, dealers will apply a credit at purchase
• Program runs through Nov 1, 2009 or when the funds are exhausted, whichever comes first.
• The program requires the scrapping of your eligible trade-in vehicle, and that the dealer disclose to you an estimate of the scrap value of your trade-in. The scrap value, however minimal, will be in addition to the rebate, and not in place of the rebate.

The program will likely breed opinions based upon personal situations. People with eligible vehicles may love it, others not qualifying or on the edge may get irritated. Some will likely be skeptical as dealers notorious for selective price manipulation try and game the system. In the end, it is our tax dollars being manipulated or in this case spent to incentivize a desired activity, but the principle behind this is not new. It’s the basic principle of our tax codes. As an example, every year I can deduct mortgage interest from my taxes, motivating me and others to own a home rather than rent. It’s incentive. The whole tax code is written in this way to incentivize or discourage certain activities. Since a simple, flat tax is nowhere in the future, I would much rather have the choice to participate in a voluntary CARS program if eligible than to get yet another, involuntary punishing tax piled upon me for gas usage or my carbon footprint.

And what the hell … a billion dollars to the government these days is akin to pocket lint.

UPDATE: It Worked Too Good, Now Its Out of Money!

Ahhhh … Incentives … Amazing how they work!

From HotAir:

Unlike pretty much every other Hopenchange economic policy, not only did this one work, it worked better than expected. And yet, I can’t help thinking there’s a lesson in the fact that a centrally planned program budgeted to run through the end of October went bust in, er, seven days. That’s some miscalculation — not unlike the miscalculation that promised unemployment no higher than eight percent once we pinched that $787 billion loaf known as the stimulus. And naturally, the program came buried in so much bureaucracy and paperwork that some dealers gave up on it despite the amazing business it drummed up.

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