What happened
The Senate overcame Republican objections to clear a $1 billion “cash for clunkers” program, attached to a $106 billion supplemental war-funding bill. The House already passed the “clunker” provision, and President Obama is expected to sign it. The program offers vouchers of $3,500 or $4,500 to people who trade in gas-guzzling post-1984 vehicles for new, more fuel efficient models. (USA Today)
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That's great, if you can afford a new car, said The Seattle Times in an editorial. But the vouchers won’t help the poor, who are more likely to buy a better used car. The program also is skewed to reward “extreme gas guzzler” owners over Prius drivers, and there’s no rule, or guarantee, that the vouchers will even be used to buy American cars.
Besides, $4,500 will cover little more than the down payment on a $27,800 car, the average price for a new vehicle, said Carlos Lam in Seeking Alpha. People will have to borrow the rest. It’s “foolishness” for the government to be tempting consumers to take on new debt, when too much debt is why we’re in hot water in the first place.
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