A Better Alternative to Cash for Clunkers

Today is my last day of work as Engineering Director for Accsys Technologies/Titan Wood. After today, I will continue to maintain an advisory relationship with the company, as I still thoroughly believe in the company and the technology, and I want to help them succeed.

However, tomorrow I board a plane to Hawaii to begin a new role. I have discussed that role briefly in the past, and will elaborate on it in the future. But that’s not what this post is about.

For the past year and a half, I have managed to live without a car. I was able to do that because I spent so much time overseas, and I didn’t need a car in those situations. I walked, I biked, I rode a bus, or I took the train. At times I have needed a car here in the U.S., and when I did, I rented one. But once I get to Hawaii, I think my days without a car have to come to an end. Before I go to work each morning, I have to drop kids off at two different schools, and the area I will live in gets a lot of rainfall. Therefore, I have decided to go ahead and get a car.

Previously, when I was considering getting a car, I asked readers for suggestions. In fact, it was a year ago this week that I thought I was going to have to buy one, so I put up a post asking for suggestions. Some pretty good suggestions came out of that post, but I ultimately decided to postpone my purchase. I don’t believe I can postpone it any longer, so I will start shopping for a car shortly after my arrival. (Again, suggestions are appreciated).

As I began my preliminary search on the Internet, it seemed to me like there weren’t that many good deals to be had for what I was looking for. Unfortunately for me, I don’t drive a clunker, so I am not eligible for those recent stimulus funds that were made available. And because the stimulus funds have driven demand to the highest levels in quite some time, it seems to me that dealers aren’t likely to be as amenable to offering a good deal to me, as opposed to someone who will bring in a $4,000 stimulus check. This has left me wondering, “Where’s my stimulus?”

I am certainly not opposed to incentivizing the purchase of fuel efficient vehicles. In fact, I have suggested before that the government offer rebates for vehicles that achieve certain levels of fuel efficiency. You could pay for these rebates with a penny a gallon gas tax, which would bring in upwards of $1 billion a year. If you then turned around and used that money to offer $1,000 rebates on the first million cars sold each year (out of a total of 7-8 million passenger vehicles sold in the U.S.) that meet certain fuel efficiency standards, you would incentivize fuel efficiency.

Instead, what we have done is to reach into a seemingly bottomless well of deficit spending and offer up overly generous incentives to just those who were driving old clunkers that probably weren’t going to be on the road that much longer anyway. The fact that the first $1 billion was gone in less than a week should tip the government off that they were throwing far more money at this issue than was necessary.

That was the point of my recent post criticizing the Cash for Clunkers program. It isn’t that I don’t agree with the intent, it is just that we spent far too much for what was achieved. As I pointed out in that essay, based on the projections of fuel savings, we spent $13.89 for each gal/yr of gasoline saved. And by “spent”, I mean we increased the national credit card bill that is the deficit, and which we are going to hand to our children to pay. (Incidentally, that is by no means a partisan criticism; Bush ran up enormous deficits that will haunt us for years).

So there is my alternative to Cash for Clunkers. Increase gas taxes by a cent, and offer $1,000 rebates to everyone who meets specific fuel efficiency standards with their purchases. I would put a sliding scale on it so that cars that get 30 miles per gallon (mpg) get $1,000 and cars that get 40 mpg get $2,000. And if a penny a gallon wouldn’t pay for the program, increase it to two cents a gallon.

Boosting the fuel efficiency of the fleet should reduce gas consumption anyway, which means that even the most vehement anti-tax critic out there should see that the two cents may ultimately translate into a savings on the cost of gas. But it would also mean that we are paying for the program as we go along, instead of handing the bill to our children. We simply can’t continue to burden the next generation with debt, or their quality of life is going to be lower as a result of the choices we have made.

Note: As noted earlier, I am now in transition to Hawaii. I am not certain about how quickly I will have Internet access and reestablish communications. So this will be my last post for at least a few days, and maybe a week. I will be back online as soon as possible.

70 thoughts on “A Better Alternative to Cash for Clunkers”

  1. I like your idea, but I propose a slight change. Apply the gas tax upfront, when a car is purchased. A buyer of a 15 mpg SUV, which will use 10k gallons over its life, thus pays an extra $100 at time of purchase. Or $200 if we go for two cents per gallon. This way our incentives and disincentives both act directly on the original purchase decision, for maximum impact.

  2. It surprised me when two people I knew traded in 4X4 Pickup trucks for 4×4 F150s under the cash for clunkers program. Both of the pickup trucks that got traded in were in good condition (no body rust).

    I know that is just one data point. But seeing that, I could not help but believing that the whole program was a joke. As far as I know, the fuel economy improvements in pickup trucks has been nil.

  3. Good luck in Hawaii.

    Over the weekend I got to drive the non-hybrid version of the 2010 Ford Fusion, 2.5 l Duratec engine. I really liked it. Drove about 350 miles on 12 gallons of gas for just under 30 MPG. Plenty of power, comfortable seating. Not a bad little car.

  4. What about Jevons' Paradox?

    If people save money by driving a lower mpg car, they will have extra money to spend on something else that uses energy.

    The evidence from the last few decades of politician-mandated higher mpg vehicles is that people have driven more miles, and total demand for gasoline has not declined.

    Good luck with your new venture!

  5. Jevons Paradox or not, if people are driving fuel efficient vehicles it will make for an easier response to peak oil.

  6. "if people are driving fuel efficient vehicles it will make for an easier response to peak oil."

    That statement is not self-evidently true.

    Peak oil will come whether people are driving around in cars or shopping carts. When it does, the price of gasoline will rise. When the price rises, people will act in their own best interests — without relying on Comrade Obama to make decisions for them.

    The response to higher gas prices will include informal ride-sharing — something that is quite practical once the lawyers have been put in their place. It is standard practice in the Former Soviet Union today. 7 people in a minivan would get over 150 person-miles to the gallon — several times better than the lonely Prius driver in his "efficient" vehicle.

  7. Kinu-
    I have to agree in one regard with you–we are being stifled in the US by convention and rules and law. In rural Thailand, anybody who wants to can convert their pick-up truck into a jitney. Generally, they put wooden slats longways (front to back) over the wheelwells in the bed of the truck, and a simple roof.
    Good to go, and probably six people in the truck at any time. sometimes more. The drivers follow routes that make sense–where the passengers are and want to go.
    Of course, it helps that Thai people are scrupulously honest (in general) and never leave w/o paying.
    On another note, these jitneys become ambulances if they chance upon a serious accident. I witnessed such an event, and the passengers got off the jitney w/o complaint, and the the injured party was loaded onto the truck, and off they went to the hospital. No whining or complaining from anybody, in fact most people wanted to help in some way.
    It is amazing what can be done when common sense prevails.

  8. You had to know it was coming. After hearing the Volt would get 230 mpg,the time to payback stories took all of 24 hours to hit the web. This guy decided to compare the Volt with a base Corolla,for a payback distance of 158,000 miles. Why a base Corolla? Why not a Corolla with similar HP? Then the distance drops to 100,000 or so. Compare it to a Prius,and you only need to drive about 60,000 miles. Compare it to a top of the line Accord,and a drive around the block will break you even. Corolla buyers wouldn't step to the plate if the Volt were $30,000. Corolla buyers are looking for cheap. Anyway,here's the story.


  9. My "clunker" is a 2001 Honda Insight 70mpg Hybrid. I wouldn't dream of trading it in. While I did receive a nice tax deduction in 2001, it was nowhere near $4,000. Rewarding those who a decade ago purchased Yukons or Escapes with a generous rebate is a little offensive to me. Do those who received the Hummer deduction also qualify for the rebate?

    With current and projected gas prices on the islands, I would suggest high fuel efficiency even at the expense of comfort. Being an island, I might avoid batteries. I don't think they produce batteries there, but I'm sure they dump them.

  10. I've got a better idea. Scrap cash for clunkers altogether and keep gas taxes where they are. Here's how you give people an incentive to buy more fuel efficient cars: The more fuel efficient car you buy, the less you have to pay to travel a given distance:

    If you buy a car that gets 20 mpg, and gas is $2.75 a gallon, it costs you $0.1375 to travel one mile. But if you buy a car that gets 30 mpg, it only costs you $0.0917 to travel one mile.

    I know it's crazy, but it just might work.

  11. "I don't think they produce batteries there, but I'm sure they dump them."

    Most car batteries are recycled today. It will usually cost more to throw the old one away. Autozone charged me an extra $10 last time I bought one. I had to bring the old one in to get that $10 back. I don't think many lithium-ion batteries will be dumped either. They're very expensive,and recyclable. GM says Volt batteries will be good for 150,000 miles. At that point,they'll still work,but distance will start suffering.

  12. “Being an island, I might avoid batteries. I don't think they produce batteries there, but I'm sure they dump them.”

    Huh? The environmental regulations for Hawaii must be at least as strict as those required by the US EPA.

    There are many reasons not to haul batteries around. However, HEV make sense when lots of stop and go city driving is necessary.

    “Corolla buyers are looking for cheap.”

    I bought a Corolla form my wife because of reliability and quality. The only other car I considered was a Civic. Her Corolla is a luxury car. It has all the luxury she wants. It also has all the HP you need. There are cheaper 5 passenger cars.

    The problem I have with ‘luxury’ cars, particularly GM, is that the luxury is mostly cheap junk that breaks and only adds weight.

    The last new car I bought was a Honda Del Sol SI the first year they came out. I ordered it before they were available at my backwater dealer for $13k. While I was waiting for it to arrive, I was in a very upscale area of California on business. The dealer has taken the same car and increased the price to $26k. The leather seats were very nice.

    “Volt would get 230 mpg”

    The preceding is a test of your BS meter. If your BS meter did not peg high, you are a clueless environmental nutjob. While I encourage good environmental choices, I am not at all impressed with victims of ‘greenwashing’ who buy stuff without making an effort to see if it is actually better.

  13. Corolla buyers aren't "looking for cheap" – they're looking for a car that will last at least 10 years, cost $15K new and almost nothing to maintain, and gets 40 mpg on the highway with cruise control set at 70. At least that's why we bought our newest ('03) Corolla and that's the mileage on our last 4,000 mile cross-country trip. Haven't had to do anything but routine maintenance for the last six years on that car. And the '96 Corolla has 150K miles on it and we spend less than $500 a year on maintenance. Let's see a Ford, or any other American car, match that mileage, dependability, and price.

  14. "they're looking for a car that will last at least 10 years, cost $15K new and almost nothing to maintain, and gets 40 mpg on the highway with cruise control set at 70."

    The "cost $15k new" is the important part though. There are pricier cars that will do the same thing,right? I don't think the Volt,or the Prius for that matter,will have much appeal for the Corolla demographic.

  15. How do you figure the 230mpg is b.s. Kit? If the average driver gets 230mpg on a gallon of gas in city driving,then the figure isn't misleading at all. If the cost of electricity rises,and gas prices stay the same or decline,those EPA figures will be lowered. Right now,driving on electric costs about 1 cent per mile. A car getting 23mpg will cost 10 cents per mile using gasoline. 10 X 23= 230 mpg. It's simple math.

  16. And yet one of my friends who bought a Prius last year, previously owned a Corolla. Then again, he managed to get a nice discount on the Prius just before gas prices started skyrocketing.

  17. That's how demographics usually work Clee. Our first new car was a Dodge Shadow. We traded it in for a Nissan Quest. If not for the young kids,we might have gotten a Taurus or Camry. I know you can't put every buyer of anything into one category. 60% of CRV buyers are women with children. The primary demagraphic targeted by the Toyota Corolla is the first time car buyer looking for an inexpensive vehicle. I'm just wondering why that author decided to compare the Volt with the Corolla. Why not compare it with an Accord?

  18. That “miles per gallon” rating is completely bogus. It is a measure of the gasoline consumed, ignoring the energy provided by recharging the battery by “plugging it in”. This is an arbitrary figure, because if the car is used in EV mode only, the result is “infinite mpg”. If the car were used to drive 50 miles on gasoline and 9,950 miles on electric, then GM could claim it gets 10,000 mpg! Pick any number you like. It’s meaningless!

    The real efficiency is basically the same as the Prius when running on gasoline (50 mpg US), and roughly twice that in gasoline equivalent when running on electricity. (Very roughly: GM’s claim is that the Volt consumes “as little as 25 kilowatt hours per 100 miles in city driving”. 1 kWh = 3.6 MJ, so 25 kWh = 90 MJ. The energy density of gasoline is on the order of 32 MJ/L, so 25 kWh is the energy equivalent of roughly 2.8 L, or 3/4 of a U.S. gallon. Thus, according to GM, the Volt, in EV mode, gets mileage as good as (i.e., the upper limit is) 133 MPG.)

    How can a car running in gasoline mode at ~50 mpg and full electric mode at the rough equivalent of 133 MPG be rated at 230 MPG?

  19. Well, the Corolla was not the first car my friend had, and he's still single with no kids, so he hasn't strayed far from the Corolla demographic.

    I think that author's comparison is bogus no matter what non-PHEV he compares the Volt to.

  20. Maury wrote: How do you figure the 230mpg is b.s… ? … If the cost of electricity rises,and gas prices stay the same or decline,those EPA figures will be lowered.

    Somehow I don't think the EPA mpg rating for PHEVs will depend on the price of electricity. If it did, that would be even worse B.S. A car's EPA mpg rating varying from year to year depending on electricity price with no design changes to the car at all, would be misleading.

    Someone asked GM how they arrived at 230 mpg, and it has nothing to do with cost of electricity.
    "in summary, Nitz explains that the average Volt driver charging his car nightly can expect to burn one gallon of gas for every 230 miles traveled over time based on the behavior of a particular random population that was studied in 2001."

    Despite what I'm seeing in the blogs, I'm not convinced that the 230 mpg was based on the proposed SAE J1711.
    http://www1.eere.energy.gov/vehiclesandfuels/pdfs/merit_review_2009/vehicles_and_systems_simulation/vss_05_duoba.pdf page 13.
    " Major Consensus Items of J1711
    * Do not combine fuel and electricity into a composite MPG Result
    – Report both MPG and AC Wh/mi (from plug) separately

    I agree with that consensus, and wish GM would report that instead. I also hope the EPA label will keep them separate.

    According to the GM press release, "Tentative EPA methodology results show 25 kilowatt hours/100 miles electrical efficiency in city cycle.
    That's 0.25 KWh/mi. Current average residential retail price of electricity in the US is 11.6 cents/KWH.
    So a GM Volt in EV mode would cost 2.9 cents/mi. That's already higher than the 1.3 cents/mile suggested at that URL you gave http://tinyurl.com/qdmq6w . That shows how it's B.S. to believe the 230 mpg rating while ignoring the electricity energy and cost inputs.

    If one charges up 8 KWh/day, that's 240 KWh/mo, which here in PG&E territory would put one in Tier 3 rates of $0.26/KWH. So it would cost PG&E customers 5.2 cents/mi.

  21. "It is a measure of the gasoline consumed, ignoring the energy provided by recharging the battery by “plugging it in”."

    That's not true Max. The EPA is in the position of comparing apples and oranges,so they used a cost comparison. Gas costs 10X more right now,and the average car gets 23mpg. The average driver won't use a drop of gas in the city. Hence the 230mpg figure. I'm pretty sure EV's will get the same figure. With $5 gas,the figure should jump to 500mpg.

  22. "How can a car running in gasoline mode at ~50 mpg and full electric mode at the rough equivalent of 133 MPG be rated at 230 MPG?"


    Because the electric motor is easily twice as efficient as the standard internal combustion engine.


  23. The E.P.A.’s highway mileage methodology is not yet available, even in draft form. Mr. Posawatz predicted that in highway driving the Volt would get less than 230 miles a gallon, but “well into three-digit numbers.”

    Any actual number crunching is highly speculative, because the E.P.A. isn’t talking about its methodology. Dave Ryan, a spokesman for the agency, said in an e-mail message, “If you’re specifically asking about the procedures, they’re still preliminary, so there’s nothing to discuss yet.”

    Cathy Milbourn, an E.P.A. spokeswoman, referred inquiries back to G.M., where Rob Peterson, a G.M. spokesman, said, “Our performance numbers are based on their methodology.” In an earlier statement, the E.P.A. said it had “not tested a Chevy Volt and therefore cannot confirm the fuel economy values claimed by G.M.”

    An analysis by GM-Volt.com, an unofficial site that is not affiliated with G.M., runs the numbers this way: The E.P.A. city cycle is just over 11 miles, so the Volt would run 40 miles gas free, then go through an 11-mile cycle with the gas engine running in “charge-sustaining mode.” If we assume the Volt gets 50 miles a gallon in that mode (based on the number G.M. cited for its concept vehicle in 2007), then it would use .22 gallons of gas in 11 miles, the equivalent of 231.8 m.p.g.


  24. GM comes out with a 230 mpg number and a half dozen people have come up with a half dozen (sometimes conflicting) ways that GM might possibly have reached that number. That alone could set off my B.S. meter.

    Though in this case, my BS meter remains pegged even after someone actually got the clarification from the GM executive director of hybrid powertrain engineering.

  25. Maybe the EPA should switch to a cents per mile system based on the state average for fuel type. A Civic GX will cost about 3 cents per mile in Utah. More in states where natural gas isn't so cheap.

  26. Oh swell, a label with 50 numbers, one for each state, and you can't compare different model years because energy prices change constantly.

    I prefer just 2 numbers; one for miles per gallon starting with an empty battery, and one for miles per KWh starting with an empty fuel tank.

  27. “they're looking for a car that will last at least 10 years, cost $15K new and almost nothing to maintain, and gets 40 mpg on the highway with cruise control set at 70.”

    Exactly correct, except I expect to my Corolla to last 20 years and 300k without major repairs. I do expect to replace the battery 4 times. The starter, alternator, and water pump I expect to replace once.

    If you are considering economy of ownership, the Corolla is the standard for comparison. For those who want to compare stupid choices to other stupid choices, pick whatever you want to compare the Volt.

    One of the great things about America is the infinite number of bad choices. I once bought a used AMC pacer even after being told by everyone I knew that had owned one that they were junk. It only took driving it to work a few days to learn to hate it.

    Clee, anytime, GM says anything my BS meter pegs high.

  28. "a label with 50 numbers, one for each state"

    I was thinking one number for each state. A regular civic would obviously have a different number than a civic gx. A Prius would have a different number than a Prius PHEV. But,fuel and electric costs are different from region to region. The intent of the EPA number is to give an idea of cost,right?

  29. GM’s scheme for computing that fantastic rating of 234 mpg fails to take into account the energy used to generate the electricity the battery gets from the grid.

    But obviously that electricity has to come from somewhere. Therefore, with tongue firmly planted in cheek, I propose the following:

    ~ My grid electricity comes from coal. Therefore, GM should be ready to provide data on how many miles per kilogram of coal burned I’ll get for that “up to 40 miles” before the range-extender engine has to kick in.

    ~ For those who get their grid electricity from a nuclear reactor, GM should provide miles per chain reaction, or nuclei split. (Please, some nuclear engineer jump in and help me with the suitable atomic metric.)

    ~ For those who live in Buffalo and who get their electricity from Niagara Falls, GM can provide data on the Volt’s mileage rating per cubic meter of water over the falls.

    ~ For those who get grid electricity from wind turbines (when the wind is blowing) GM should be ready to provide a miles per 100 blade revolutions rating.

    Then we could all make sense of this. An actual mpg rating for when the car is burning liquid fuel, and a separate economy metric for when it is using electricity that came from the grid.

  30. RR,
    The last time you asked for car recommendations there were rumors of a 94 mpg Prius about to come out, which turned out to be 50 mpg in reality, and rumors of a 60 mpg VW TDI which turned out to be 34 mpg EPA (40 mpg real life). Now there's rumors of a Yaris hybrid for 2011 at 94 mpg. Of course that won't turn out to be real either.

    "Expected to list from about $15,600,…The Yomiuri Shimbun newspaper claims the Yaris hybrid will achieve 94 mpg in the Japanese mileage cycle, narrowly edging out the new Prius at 89 mpg. No direct conversion is available for the U.S. cycle, but the Yaris hybrid would easily score better than 50 mpg."

    I'm betting it won't do any better than the original 2000 Honda Insight.

  31. Why all the angst over Volts mpg figure? The idea is to make the US energy secure. To get off imported oil. Electric and PHEV will go a long way toward that goal. Granted,we also need clean,renewable electricity. But,that's on the way too. And it will be a lot easier than making biofuel for a billion vehicles.

  32. Why all the angst over Volts mpg figure? The idea is to make the US energy secure. To get off imported oil. Electric and PHEV will go a long way toward that goal.

    Former Sec. of State George Schultz, ex-CIA head Woolsey and many others are of the same mind.

    Widespread adoption of PHEVs and EVs would put an end to our decades long oil migraine-nightmare.

    But with an estimated 100 Trillion worth of oil still in the ground, you can expect widespread opposition from domestic exploration and production companies, OPEC, vested ICE interests, refineries, after-market parts makers, etc.

    Apparently, Chevron (as soon as they controlled the Ovonics patent) sued Toyota to stop using the EV-95 battery in the RAV4. (if interested, see comments in previous post)

    Electric vehicles are "angst" producing, disruptive technology for many people. But I think the handwriting is on the wall.

    Last month, hybrids had a 3.5% market share – all-time highest ever, and we are nowhere near $4 a gallon gasoline.


  33. "I've got a better idea. Scrap cash for clunkers altogether and keep gas taxes where they are. Here's how you give people an incentive to buy more fuel efficient cars: The more fuel efficient car you buy, the less you have to pay to travel a given distance:"

    People's brains don't work like that, or they wouldn't drive clunkers to begin with. The future is heavily discounted, and they aren't getting a message from the politicos that gas prices are going to be higher. So, it isn't necessarily a big punishment for them to drive a clunker. At least that's what they think, which is why we have so many clunkers on the road.

    What you have suggested is that we just keep doing what we have been doing and hope for a different outcome.

  34. "Why all the angst over Volts mpg figure?"

    I hadn't noticed angst, just a bunch of people answering your question of "How do you figure the 230 mpg is b.s….?

    One nice thing about the Volt as compared with a pure electric vehicle is no range angst.

  35. The GM Volt is first-gen, from a clunky car company. And it gets 40 miles on the charge, and 50 mpg thereafter.
    Hay-suse Alou, what does anybody expect to see in 10 years? How about 60 and 60, and better prices? That's not a stretch.
    OPEC better start acting nice. Very nice. The question is, who is going to be buying oil in 10 years?
    For what? Airplanes? And how large is the jet fuel market?

  36. I wish your tax idea would work.it just seems that the gas tax idea is dead on arrival,there is just no political will to do it. I think a consumption tax with rebates or subsidies would be better than cap and trade but that will not fly either.

  37. Actually, I'm thinking about going out and buying a "clunker," licensing it, insuring it for liability, and parking it.

    I'd almost bet they'll do this, again, in a year, or two.

  38. My friend and I have twin websites on energy/green reform and health reform. Please do check them out. We think you will enjoy the sites and all clicks on the health site go to charity.

    Front page is http://www.satvathealthcare.com and there is a redirect link at the top to the energy blog.


    Amir Satvat

  39. Looked at Amir's friend web site and was not impressed. While I might disagree with RR on a few things, he has done some heavy lifting to be knowledgeable.

    I am fed up with the word 'green' as an adjective to describe some undefined environmental benefit. Dog gone it, I love puppies and kittens too. If you are going to own an animal clean up the excrement and take the poor thing to the vet for its shots.

    CFC is one of those ideas that is not too well thought out. I saw two going to the wrecking yard on the way to work. They were muck nicer than my my 89 ford Ranger which does not qualify. When we traded the 89 Ford Aerostar (7 passenger) for a Corolla, the Aerostar went to the DAV because it was still useful.

    The best selling CFC new car is an SUV (5 passenger). Not the Corolla or Pious! It is none of my business if someone wants to spend $15k more for a 4wd SUV and 10 gpm less than many other 5 passenger cars, until they are getting tax dollars.

  40. As an economic stimulus,CFC was pure genius. Taxpayers got so much more bang for their buck than with the $700 billion stimulus bill,which is largely credited with doing jack squat. CFC pulled France and Germany out of recession. It may do the same here. Just think if we had spent 20 or 30 billion and included old light bulbs for electronic ones ,old air conditioners for 16 SEER,etc. etc. We might have turned the economy around on a dime.

    The jobs saved by the CFC program will more than compensate taxpayers for the cost of the program. When someone goes on unemployment,they go from paying taxes to receiving benefits. Their economic pain affects all of us. It means less revenue to pay police,firefighters,and teachers. Less money being spent locally. More blighted,foreclosed houses in the neighborhood.

  41. “As an economic stimulus,CFC …”

    How do you know this Maury?

    I am always skeptical of people who know something before it can possible be known.

    Anyone besides me remember planned obsolesces? GM and Ford would sell more cars by building cars that would last very long. Toyota started selling more cars by making cars last longer. I bought a 68 Corona when my ship went into shipyard. When I bought my house I could take the bus or ride a bike to work. The shipyard was a long commute. When I got of the navy I sold the 12 year old car in 15 minutes. My neighbor bought it. He notices how I was always working to keep my newer American car running but the beater car only needed tuneups and oil changes. No sooner did a put a sign in the car he showed up with cash.

    JC was president. Bad policy does not stimulate the economy. What do we know about CFC? If you give Americans money, they will take it.

    “16 SEER”

    Did that too! Heat pumps are a similar issue. New HVAC systems are more efficient than anything older than 10 years. My utility out west in a previous house provided a low interest loan to replace and upgrade my system. I then watched my neighbor need to have his repaired on the first hot day. When I bought my present house, I knew the old HVAC system on has a few years left. When part of the system failed, I replaced the whole thing. If you watch around the neighborhood, there is trend of new systems replacing dieing ones.

    So if the government is going to give me money for something I would do anyway, I will take it.

    Hoover Dam is an example of projects to stimulate the economy and keep contributing to the economy. I can not think of a thing that JC did that is worth remembering.

  42. My wife had a Chevy Nova which is the same car as the Corrolla built on the same Fremont assemby line but you get a lower price for having to put up with Chevy dealers.

  43. You know, if you really think long, and hard, about all of the taxes, of various kinds, that go into supplying parts for, building, shipping, selling, licensing, insuring a New Car,

    I'm not sure CFC isn't, at the minimum, a "Break-even Deal" for the Government.

  44. I'm taking into account all levels of "government," of course. Federal, State, Local.

    Which, if you think about it, a lot of "federal" taxes end up back at the various state, and local levels via "block grants," etc.

  45. Considering that we the taxpayers own most of the domestic car makers, the CFC program is just replacing the manufacturers rebate discount they used to need to move iron.

  46. "The jobs saved by the CFC program will more than compensate taxpayers for the cost of the program."

    So the Japanese, Korean, & German auto workers whose jobs were saved by Cash for Clunkers will pay something back to the US taxpayer? Ain't going to happen — but you knew that.

    US politicians are a complete bunch of losers! Borrowing money from the Chinese to give to auto manufacturers in foreign countries. And leaving the bill to your children & grand-children.

  47. Wait, I found a more recent article.


    Eight of the top-10-selling vehicles are made by Japanese and South Korean companies, with the Toyota Corolla claiming the top spot as the most popular car in the trade-in program. …

    The Focus had held the top spot early on in the program, which officially began July 27, but it has since slid to No. 3. …

    Government data shows that 54 percent of the top 10 vehicles were manufactured domestically. Many foreign brands, including the Toyota Corolla, are made at American plants.

  48. Clee, when you combine 2WD, 4WD, and hybrid Ford Escape it was the leading POV. This was reported by someone like Edmonds.

  49. To the person that made the comment that Cash For Clunkers may be revenue neutral for the government, this is certainly the case in the UK.

    Here the government gives a £1000 ($1700) rebate on each scrapper traded in, and to participate in the scheme, the dealer must also give £1000 off list price, for a total of £2000 ($3400) off.

    Now, in the UK, the treasury usually takes a 15% sales tax so for any car with a pre tax price of over £6667 would have payed out £1000 to the treasury anyway.

    So for a great deal of cars in the scheme, all the goverment is really doing is giving a sales tax holiday.

    And in many cases the treasury is still taking a net sales tax income on each car sold.


  50. "How do you know this Maury?

    I am always skeptical of people who know something before it can possible be known."

    Do I know for a fact that CFC will end our recession? No. But,I do know it's being credited with ending recessions elsewhere. It only makes sense that an expanded program would have had more impact Kit. Cash for Clunkers will cost taxpayers a lot less than the failed stimulus package. About 99% less.

    "Germany and France have emerged from recession earlier than expected on the back of successful "cash for clunkers" car programs and other stimulus efforts once criticized as "too puny" to work."


  51. Our Honda Odyssey was built in Alabama. The Nissan Quest before that,was built in Tennessee. My Dodge Ram was built in Mexico.

  52. All that still ducks the question — does it make sense for the US government to borrow money from the Chinese to support the jobs of foreign auto workers?

    Look, we all know the answer to that.

    The issue is where the value is added. If a Japanese company builds a vehicle in Alabama, it is OK for that specific vehicle to be part of the program. If the vehicle is built in Japan, there is no value in sticking unborn Americans with the tab for paying interest on the loan from the Chinese for the next hundred years.

  53. They're trying to keep anything that smacks of protectionism out of legislation Kinuach. There was some stink over the "made in America" requirement slipped into the stimulus package. GM and Ford sell a lot of cars in Europe and Asia. Those areas actually make a profit for them. It's probably good if we don't start tit for tat trade friction.

  54. Maury

    Interesting quote! Who said it? Was it a well respected economist with expertise on the EU? Or maybe it is a lazy Canadian journalist who called some of his drinking buddies over at the local stock exchange.

    Since I am not an economist, I am not going to try to speak with authority on the economy. On the other hand I can speak with confidence about GM engineering mistakes. Corvair, Vega, Chevette, and Pontiac Fiero come to mind. Next up on the lemon list, Volt.

  55. "They're trying to keep anything that smacks of protectionism out of legislation"

    Which is prove positive, if any more were required, that the punters in charge of US politics are clueless.

    The US is running an unsustainable trade deficit. To put that in language that a typical member of the Political Class could understand — they buy very much less from the US than the US buys from them. So who would this so-called "protectionism" hurt?

    The US needs to replace imports of automobiles just as much as it needs to replace imports of oil. And many of those looking for work in Obama's Excellent Economy might prefer to see jobs in the US making things that today are being imported — even if some economist has an arcane argument about "efficiency".

    What is "efficient" about borrowing money from the Chinese to send to workers in Germany & Japan while US workers are unemployed?

    A cynic might think that the reluctance to spend US taxpayer money wisely stems from some of those unexplained funds that poured into the Obama campaign. Were any of those illegal foreign contributions, perhaps with Japanese & German return addresses? But that would be unnecessarily cynical. As someone said long ago, the US Congress is the finest that money can buy.

  56. The US is running an unsustainable trade deficit. To put that in language that a typical member of the Political Class could understand — they buy very much less from the US than the US buys from them. So who would this so-called "protectionism" hurt?

    The US is still among the top three exporters in the world. Protectionism would certainly hurt the US too (although probably not as much as the rest of the world).

    Your trade deficit is about equal to what you spend on imported oil. Addressing energy security would go a long way to balancing the US books. By the way, this recession has slowed the growth in your trade deficit rather dramatically. So there's another way to stay in shape — keep the recession going.

  57. @ chevy volt review

    It should be noted that I made no judgment about GM marketing skills. The Fiero was a sports car with Chevette breaks yet it was Motor Trend's car of the year.

    Already there is a blog called 'chevy volt review' that is absent any reviews. Just GM marketing.

  58. "Your trade deficit is about equal to what you spend on imported oil."

    Not even close. In the tradition of our estimed host, here are some figures. Figures rather than facts, because these are obviously a lot of devils in the details.

    US trade balance in 2008:
    Exports $1.8 Trillion
    Imports $2.5 Trillion

    Deficit $696 Billion

    Major net components of that deficit:
    Petroleum $386 Billion
    Consumer Goods $320 Billion
    Vehicles $112 Billion

    Those components add up to more than the overall trade deficit because of US net trade surpluses in other areas, such as food & services.

    Bottom line — if the US had been energy self-sufficient in 2008, there would still have been a horrendous $310 Billion trade deficit.

    On the other hand, if the US had been self-sufficient in consumer goods & vehicles, the trade deficit would have been smaller, but still horrendous at $264 Billion.

    And let's not lose sight of the obvious point that a whole lot of energy consumption is embedded in those excess imports. The usual suspects love to claim that energy consumption per unit of GDP is declining in places like the US & UK. In reality, the energy consumption is merely taking place elsewhere.

    It is a sobering thought that zeroing out petroleum imports in 2008, a year which saw fairly high prices, would not have come anywhere close to closing the unsustainable US trade deficit. Which only reinforces the thought that it was dumb of the US Political Class to stimulate imports of vehicles through Cash for Clunkers.

  59. A press release for a VW Polo BlueMotion that might hit the european market next year. It's supposed to be able to get 71 mpg, but then, the last time we heard of a VW TDI going to get 60 mpg, it only got 34 mpg EPA, 40 mpg real life. So maybe the Polo will get 40 mpg EPA, 47 mpg real life. No estimates on price.


    Considering a biodiesel blend any higher than B5 voids the warranty, I wouldn't be too interested in buying one.

    Are you still managing to avoid buying a car?

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