I can see the rush right now to obtain the records of people who own cars that are over eight years old. Heck, if the lists are obtained from the government and must be paid for, we might not even require any stimulus money because there will be so many dealers purchasing the lists.

Yep, Cash For Clunkers is back on the drawing board with at least three bills introduced in congress. Dealers, of course, are drooling over the opportunity to sell a ton of new cars to all the people who would receive $3,000 to $5,000 from Uncle Sam so they can purchase a new car and get the old gas-guzzlers off the road.  Again our legislators believe that they can solve any problem by throwing money at it. You know what I'm talking about, money they don't have. Money that must be paid back. Money that can only come from taxes that our grandchildren will have to mortgage their souls for.

Hey, don't get me wrong, I think if the U.S. Government is going to give away trillions of dollars the entire auto industry should get its share, but I don't think what they have proposed in HR-1550 is going to stimulate anything.

Here is a simple breakdown of some of the provisions of HR-1550. If a car is eight years old or older it qualifies as a "clunker" and would be eligible for participation in the program. The owner of the vehicle receives a voucher to purchase a new 2009 or newer fuel efficient vehicle. The vehicle being purchased may not exceed $35,000 in value and the amount the owner will receive depends on what is being purchased. To receive $3,000 the vehicle being purchased would be a non-passenger automobile (light duty truck) assembled in North America with a minimum highway value of 24 miles per gallon. To receive $4,000 the vehicle to be purchased must be assembled in the United States with a minimum highway label fuel economy of 27 miles per gallon or a vehicle manufactured in North America (read Canada or Mexico) with a fuel economy value of 30 miles per gallon or a non-passenger automobile assembled in the United States with a highway fuel value of 24 miles per gallon. Still with me? Okay, to receive $5,000 a passenger automobile assembled in the United States must have a minimum highway fuel economy value of 30 miles per gallon or the vehicle can be a work truck manufactured in the U.S. and registered as a work truck. Only one voucher per person is allowed. The dealer issues the vouchers in exchange for the title on the high polluting vehicle. The voucher must be used immediately to purchase the new fuel-efficient vehicle. In only one other instance may the owner receive more than $5,000 and that is in model year 2011 if they purchase a battery powered car with a fuel economy rating of 100 miles per gallon.

Of course like anything the government touches there are other parts of the bill that address the re-cyclers role along with the duties and penalties for auto dealers. Owners turning in their high polluting older vehicles may also receive transit fare credits if they don't want to buy a car, but I have no idea how that would stimulate the economy. That sums up the highlights of HR-1550. On the surface this might sound like a great way to get a bunch of newer cars on the road and some junk off of it, but there is differing opinions from the collision and mechanical industry on whether this if good or bad for business. The re-cyclers are also involved and they don't like a provision in the bill that would allow them to use any part off the cars that have been surrendered except the drive train.

Mechanical shops are opposed to taking these older vehicles off the road because these cars provide a substantial part of the business for independent repair shops. But, I believe that anybody that is driving a car that is over eight years old probably can't afford to put too much money into the repair of the vehicle so their fear may be unfounded. Maybe I'm wrong, but I think a lot of these owners are the people you see at the counter of AutoZone.

The collision industry certainly is in favor of more new cars on the road because any car that is over eight years old is probably headed for the scrap pile if it is in an accident. Collision repairers want to fix newer cars that are not going to be totaled at the drop of a hat.

Now lets look at reality. I don't think this stimulus package will do what it is intended to do. Simply put, if a customer cannot afford the payments on a new car giving them an up front cash incentive (like a down payment) is not going to change their ability to pay. A ton of these people have bad credit so either they won't qualify for a loan or if credit requirements are lowered we will end in a situation similar to what happened to the banks and mortgages. To people that don't have jobs or are making just enough to get by giving them a down payment of a shiny new vehicle is not going to solve their problems. Older cars also only normally carry Pl and PD on their cars, but owners would be faced with higher premiums when they have to insure the new car. In fact, in about three years what they had to pay in additional premiums would wipe out what they were given by the government.

I can see how this bill if it becomes law would help one group of people. That group is the folks who were going to buy a new car anyway. With this giveaway program on the books it would simply be a matter of buying an old clunker for $500.00 and then using that car to receive up to a $5,000 voucher for a new one. Think about it, wouldn't you be tempted if you were in the market for a new car.

It seems government is so anxious to throw money at any problem in an attempt to get the economy rolling that little thought is being put into how these programs may not work or how people might use the money for reasons other than what they were intended.