August 03, 2008 | | Comments 2

Cash for Clunkers – An Idea worth looking at

The original article published by Alan Blinder, in the New York Times

This idea has some advantages and some pitfalls, but in an age of energy and environmental crisis, it is worth considering.  The annual cost of $8b to $20b, depends on how fast we want to ramp this program up.  The lower amount is for providing incentives for 2M cars a year and the higher amount for 5M cars a year.  It is estimated that of the 230M cars in the US about 60M cars are 15 years or older.  That is 15M cars that spew carbon at a higher rate (10 to 30 times!) than current emission controlled cars.  Newer cars also use less fuel.

The basic idea of this plan, is to provide an incentive check to people who sell their older cars and ,in return, buy a newer more efficient one.  This is an active program in several states, like Texas.  Real world experience always provides great feedback, and there is some positive and negative. Some blog feedback from these states is that the process is overly complex and bureaucratic.  An emphasis on streamlining the process for consumers would need to be made prior to launching this nationally.

Texas gives consumers, who are mostly lower income class, up to $3,500 dollars toward the purchase of a newer car.  This stimulates the right environmental behavior and also provides an economic stimulus.  Many people do not spend the full refund on the new car but spend it elsewhere in the economy or even save it !  Amazing ! We also get less efficient vehicles off the road.

These are the kind of ideas we need to be debating, not windfall profit taxes, not gas summer tax refunds, not DRILL or NOT DRILL.  Politicians should shut up and get on board with game changing ideas, show some leadership and creativity on these issues !

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  1. I finally decided to write a comment on your blog. I just wanted to say good job. I really enjoy reading your posts.

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