Just kidding. Sort of. The Washington Post reports today that, in typical Washington fashion, Congress slipped the "Cash for Clunkers" legislation into an Iraq war spending bill, which they passed yesterday. The bill now heads for President Obama's desk. He's expected to sign it.
For Democrats, the legislation nicely satisfies two of its most important lobbies -- environmentalists and unions -- in one fell swoop. The idea is to give anyone with a car that gets poor gas mileage a $3,500 to $4,500 incentive to buy a new one that gets better gas mileage. The Congress expects the program to cost around $1 billion.
But what happens to the cars that get traded in?
The details are kind of sketchy. A source I spoke to familiar with the bill's logistics explained that such matters are still being worked out. But the general plan is to scrap the car at no cost to the dealer. It looks like the U.S. government is trying to become an auto company that serves its people throughout the whole life of the car: we use GM to build and service the cars, then we scrap them with Cash for Clunkers. Senators have not yet drawn straws to see which lucky state gets the scrap yard, but this could explain why so much money in the stimulus bill was set aside to "revitalize" the National Mall.
This legislation also sets a kind of interesting price floor on the value of most used cars. It renders many pages of the Kelley Blue Book obsolete. Just for fun, I looked up an example. If I have a 1992 Ford Taurus in excellent condition, it's supposedly worth $450 as a trade-in. Nope. Uncle Sam will pay me 10x that. I'm starting to think my uncle might be getting senile, but I'll take it.
This might not get as many gas guzzlers off the road as intended. You might think this would create lots of ebay listings for clunkers with starting bids of over $4,000. But according to the Post:
To guarantee vehicles are actually roadworthy -- and not just sitting on cinder blocks -- trade-ins must be registered and insured to the same owner for at least a year.
That seems to imply that whoever requests the voucher must have owned and insured the car during that time. So I'm not sure you can buy an old car from somebody else just to get the government rebate on a new one. But maybe this is just another kink that they'll work out after the legislation is signed into law.
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