Summary
It seemed like a great idea. It had something for everyone. The plan would launch a wave of customers at dealerships while at the same time keep the environmentalists happy by removing gas-guzzling cars from the road and promoting smaller fuel-efficient models. As a wise person once said " if you try to please everyone, you end up pleasing no one."
Analysis
From the beginning, there has been a clash of worlds while this bill slowly ground its way through the sausage-maker we call Congress.
Let's look at the two primary antagonists slugging it out over this particular piece of legislation: Those being the Environmentalist Camp and the Economic Recovery Camp.
So what are the alleged problems with the resulting legislation? Let's summarize from each camp's point of view.
The environmentalist camp says:
The legislation allows for only small improvements in mileage to qualify for the government-supplied voucher.
Clearly not enough is not being done to improve air quality with this program and allowing government funds to be used to purchase new trucks and SUVs is viewed as abhorrent.
The recovery camp has even more complaints:
Used vehicle sales and values will be depressed. The vouchers can only be used for new vehicles.
They claim the majority of owners of qualifying clunkers are in the lower income brackets and usually these people cannot consider a new vehicle purchase. Not allowing vouchers to be used for used vehicles excludes many clunker owners from taking part.
The program requires that the customer own the vehicle for at least one year prior to the transaction. Obviously Congress was concerned buyers would go out and purchase any old clunker in order to qualify for the voucher. So? Doesn't it make sense to encourage as many transactions as possible?
Well, not to worry, the bill only funds $1 billion for the program. Therefore, when (or if) the $1 billion runs out Congress will get another crack at getting it right.
However, in spite of all its flaws, this bill will spur some new vehicle sales. It will also help to remove some gas-guzzlers from the road. So it won't be a total loss on all fronts. Lets hope reason takes center stage in the next round.
