Washington is hard at work on spending our money! Currently they are working on a "cash for clunkers" bill that would in effect allow people to trade in junkers and get a federal tax credit for buying a new car. The bill is supported by the auto industry. The bill was tacked on to a bill to fund the Iraq and Afghanistan wars.
The "cash for clunkers" bill would give tax payers a tax credit for up to $4500 for automobile purchases between July 1st and November 1, 2009. The funding amount is one billion dollars so the program could end sooner if it spurred sales.
The bills objective to trade-in gas guzzlers for more fuel efficient vehicles. A purchaser of a new passenger car would receive a voucher for $3500 if their new vehicle new vehicle gets 4 MPG combined mileage more than the trade-in vehicle. They would get $4500 if the new vehicle gets 10 MPG more than the old vehicle.
The bill is controversial since environmentalists are of the opinion that the bill could give the credit to someone who gets a additional 1 MPG for the purchase of a light truck like the Hummer H3t, which gets approximately 16 MPG. Certain Senators like Diane Feinstein (Democrat CA) are upset that the subsidies could be used to purchase gas guzzlers. She and other Senators proposed an amendment that would increase the gas mileage requirements and allow the purchase of used cars.
My take is that some type of program like this has been used in other countries to spur auto sales. Italy, Spain, Germany, England and Brazil all have somewhat similar programs. Some of the programs have met with success....other less so.
Congress should review the other countries programs and find the most successful model and implement. It would be good to get car sales going up again. The current bill is riddled with inconsistencies and limited funding. If congress wanted to stimulate auto sales they should implement a serious program. The current bill will probably have limited impact....it it unfortunate that congress cannot do things the right way....rather than half way.
If your in the market for the next few months.....I would recommend taking advantage of the voucher. It would be an additional discount beyond what the manufacturers are offering.