The House of Representatives has voted to allocate an additional $2 billion toward the Cash for Clunkers plan to revitalize the auto industry, after pent-up demand for new cars exhausted the first billion in a matter of days. This is good news for the hobbled car companies, which need a lift after auto demand fell to its lowest level in a half-century. But is Cash for Clunkers really a good deal for Americans?
I can't say for sure, because I don't have a list in front of me that appraises the actual value of every car, truck and SUV traded into the government for up to $4500. But I share the skepticism of some commenters from my last post. If your "clunker" is still worth, say, $2000, giving the government your vehicle might net you $2500 (rebate of $4500 - value of $2000 = $2500). If you put that toward a new Ford Hybrid at $23,000, that still leaves you with a price tag north of $20K. That's not a huge difference, and for Americans still paying down debt, they might be better off looking for a used vehicle.
I can't appraise the value of every rebated car, but I can try to appraise the value of program. And I think it has issues. By refusing rebates for cars with MPGs over 18, the government is weirdly discriminating against consumers who were worried about fuel-efficiency before the government turned that virtue into a $1 billion sweepstakes.