Saturday, August 08, 2009

Cashing In

When you get ready to go on your summer vacation, there are a number of things you do. You stop the paper and the mail, and empty all the trash cans. You check to make sure the water to the washing machine is turned off. And you put in a little extra time at your desk, be it home or office, making sure any last minute bills are paid or paperwork is taken care of that can't wait a week or two.

If you're the House of Representatives, you kind of do the same thing. But since someone else is taking care of the trash and turning off the taps, you can focus on the really important stuff. And since your recess is not a week or two in length but a full month, it's especially important to clear your desk, because there are so many important issues that affect so many people, and can't wait until after the last Labor Day barbeque.

And so as one of their last official acts before they headed home for their summer break, the House put aside health care, put aside the wars in Afghanistan and Iraq, put aside reform of the banking system to work on a really important issue: your driveway. All other business was shelved so they could turn their full attention to extending the funding for the "Cash for Clunkers" program, known officially as the Car Allowance Rebate System... yes, the acronym really is CARS.

Under the program, drivers can give up their old fuel-inefficient vehicles in favor of new fuel-efficient ones and get paid for doing so. In what is obviously a tribute to the IRS, it's not as simple as it sounds. The value of the credit for the purchase or lease of a new passenger car depends upon the difference between the combined fuel economy of the vehicle that is traded in and that of the new vehicle that is purchased or leased. So let's get out our calculators and figure this one together.

The ruling says that if the new vehicle has a combined fuel economy that is at least 4 but less than 10 miles per gallon higher than the traded-in vehicle, the credit is $3,500. If it's at least 10 miles per gallon higher than the traded-in vehicle, the credit is $4,500. So my 2007 Jeep gets 18 miles per gallon in the city, 22 on the highway, for a combined mileage of 19. If I want to buy a 2009 Dodge Caliber, which gets 27 miles a gallon, I would get $3500. If I want a Toyota Yaris, which comes in at a combined rate north of 30, I would get the $4000. Of course, I want neither, so the bounty would have to be a lot higher for me to make the switch.

The program is designed to do 2 things. It's supposed to drive consumers to the showrooms, which will help the ailing auto industry and all those that depend on it. And it will help decrease energy usage, which is good for both the economy and the environment. Both are laudable goals, though critics point out that it's just one more instance of a government handout which will inevitably cause taxes to rise.

That being said, the program has proven very successful, which is why the House had to act. Original estimates were that the original billion dollars allocated would last a year. Instead, demand has been running about a billion dollars a month. That's a whole of lot of Buicks coming off the road, and an equal amount of Hondas going on.

One can surely see where this will lead: other industries will push for similar programs to help kick start them. It's just a matter of time before lobbyists for the beleaguered computer industry push through a "Dollars for Desktops" program. Under that one, you'll be able to trade in your old PC or Mac for a shiny new laptop. The microprocessor industry will benefit from the sale of new hardware, while the internet will get quicker as better virus protection comes online with the new machines. Or perhaps the fashion industry will get their "Shekels for Schmatas" legislation passed, whereby you can trade in last year's outfit for a new one. It will drive shoppers to the malls, and reduce the amount of worn out spandex which can cause rashes.

Then there's the young lady I spoke with who was telling me about her new beau of 5 months. He is perfectly fine, funny and good looking. But then I told her about the upcoming "Bucks for Boyfriends" program, wherein she could trade him in for $1500 and get a new one. Being a conscientious consumer and a patriotic American, she was ready to cut him loose in a New York minute.

Husbands, beware.


Marc Wollin of Bedford is glad Congress is taking a recess. They need to get back to the real world. His column appears regularly in The Record-Review and The Scarsdale Inquirer.

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