So after I posted a month ago (gosh I need to start publishing more of my thoughts more frequently) about my TADA bailout plan, I figured I should take a look at our country’s auto industry bailout. Again, let me preface this with the fact that I am not an economist, I just play one on the internet/tv/my dreams.
So if you read my last post, you know I prefer giving money to lots of people, not just a few, so as to spread the impact any stimulus can have as far as possible. So this leads me to my latest stimulus idea which was cobbled over dinner with my Dad the other day (mostly his idea btw). Lets incentivize people to get rid of their old cars.
There are 200 million cars on the road in the US (give or take a few million), a huge % of them are over 10 years old. So let’s take the 30% (60 Million cars) and find a way to turn them into sales for our domestic car companies and save jobs here in the US. Its so simple its almost ridiculous actually.
So instead of giving $50Billion or more to the car companies directly, lets earmark $25Billion annually for a “Clunker Trade In Credit”. So if your car is 10+ years old, gets under 20MPG highway, and is worth less than $5k, you can qualify for a $5k trade-up credit. Now there will be some key stipulations
1. New car must be predominantly manufactured in the USA
2. New car must get 30MPG Highway or better
3. You must have owned the car for 3+ Months
4. You must be a tax payer
So basically we would taking 5 Million clunkers off the road each year, recycling what we can of them, then boosting domestic car demand by 5 Million cars each year. So the most likely growth point in sales would be in smaller more fuel efficient vehicles.
Giving auto manufacturers money to keep building shitty cars is stupid. Giving them money when no one wants to buy their cars is also stupid. But giving consumers money to buy better cars and driving demand is smart. So congress, be smart.