Congress May Limit Cash 4 Clunkers To Those Making Less Than $50k
As Congress debates whether to add an additional $2 billion to the broke-due-to-extreme-popularity "Cash 4 Clunkers" program, several amendments to the program are being considered. One of them, according to the NYT, is an income limit of $50k per year for individuals, and $75k for joint filers.
The NYT says:
As part of the deal in the Senate, the Democratic leadership agreed to allow debate on seven amendments to the bill, six from Republicans. One, to be considered Thursday and offered by Senator Tom Harkin, Democrat of Iowa, would set income limits on who could receive the money. Under his proposal, only individuals with adjusted gross incomes of less than $50,000 or joint filers with adjusted gross incomes of less than $75,000 could take part.
What do you think? Does an income limit make sense? After all, one does still have to buy a new car, which, even after the rebate, can still be expensive.
Agreement On A Vote to Extend Car Program [NYT]
(Photo:Ben Popken)
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Comments:
So they want to limit it to people who probably can't afford to buy a car(even with a value coupon) and will have to go into debt to get one?
this is lame. just give us the money so we can all buy cars!
If the purpose of the bill is to stimulate car sales and reduce demand for gasoline, then the amendments make no sense.
This turns the whole thing into just another welfare program. Bad idea. From there ,the usual gang of Santa Claus wannabes in congress will turn this into another "right" enjoyed by the poor , who can't afford a new car anyway.
Not hard to see why the whole government's approval numbers are in the toilet.
That's nice. Entice lower income people to buy new cars they probably can't afford. In 6 months to a year we should have a wave of car foreclosures. There are still a few financial giants here on Wall Street that can go out of business due to investment loss on those not able to pay their loans.
It is amazing the hoops the govt will go through to make the consumer go into debt.
They need to take the auto industry's claws out of the program and make the car requirements more stringent, NOT make the purchaser's qualifications more stringent. If the point of the whole exercise is to get "clunkers" off the road and get money into the hands of the US auto industry it doesn't matter what the salary of the customer is. Also, $50k per year is a LOT different in Iowa than it is in NYC - they need to account for cost of living. It doesn't surprise me that a senator from Iowa would propose something like this.
What they need to do is:
1) Make the MPG difference clearer/more consistent for certain vehicle classes (like minivans)
2) Increase the qualifying MPG minimums for the new cars...they exist.
3) Make it so that only cars *manufactured* in the US qualify for the rebate (this includes the US manufacturers as well as models from some others like Toyota and Honda)
This program was a nod to the auto industry and the environmental lobby. The by-product of it was gaining some possible political capital from the popularity of it.
To reduce the set of people eligible for the plan would reduce all of those benefits. For what? Fiscal responsibility? Now, of all times?
It seems to me the members of Congress are running around like chickens with their heads cut off.
How about trickle-up clunkers?
If I trade my still running and getting 30mpg 1995 Dodge Neon (with 254,000 miles) on a new car that gets same or better milage I get a $3500 new car credit and my old car gets -given- free to someone makeing less than $50k per year who turns in an 18mpg or worse car?
How about that for a stimulus? Huh, anyone, huh????
@Snarkysnake: Comprehension fail. Lower income people will qualify equally both with and without income limits on the legislation.
All this does is prevent those who make big $$ from taking advantage of a program they don't necessarily need.
Though, I do think the limit should be raised by about $25k for both individuals and married folk.
@nnj: Again, Comprehension fail. Lower income people will qualify equally both with and without income limits on the legislation.
Adding an income limit simply prevents higher income people from participating. It does nothing as far as further incentives for lower income people.
@zigziggityzoo: It is adjusted gross income, though, not straight income, so it actually includes more people than the number would suggest.
@apd09: I take personal offense.
I make 57K salary and my home maker wife and I CAN and DID afford a "new" used 2007 Honda Pilot that was in excellent condition with low Mileage. We also considered several *new* cars (Highlander, RAV4, Mazda M5, and several others) all in the same price range.
We owned our trade-in outright, and currently carry no credit card ballances. This was before C4C, and our trade in would not have qualified us anyway, but try not to generalize an entire salary range of people.
@econobiker: Seriously. I'd like to trade in my 1988 LeSabre (100k miles, EPA 20MPG) in for a new Jetta TDI (EPA 40MPG), but the rules say I need 18MPG or worse to qualify.
I'm helping out the economy and the environment just the same, but I don't qualify due to a simple rule.
@nnj: at 50,000 a year one can easily save enough money to buy a new car, without payments and without the credit. You simply have to accept that it won't be a Mercedes, and that you can't have a brand new car every 2 years. If you buy a $22,000 accord and drive it 10 years ( they can easily make that, mine is going strong at 16 yrs old) you will have had time to save up another $22,000 (plus inflation) to buy another new one.
@zigziggityzoo: The point of the program, though, is not to help people buy new cars. It's to get people to scrap cars with poor fuel efficiency in favor of cars with better fuel efficiency. Without the incentive your average middle class family (because $75,000 is certainly not "big $$") doesn't have much reason to dump the Suburban in favor of an Escape.
How do you get that someone who makes 50k can't afford a new car? Considering some cars like the Cobalt are less than $10,000 after the credit, a new car is affordable to people making much less than 50k if they spend their money wisely and budget. I make less than 50k, and only 4 years out of college, have saved more than enough money to go out and pay cash for a brand new car if I wanted to.
@zigziggityzoo: So how is this NOT a welfare program? I make enough per year (gross), that I would not qualify under this program. Why should I be disqualified from the program just because I make more money? This is not health care or some essential item. These are brand new cars we are talking about.
@TheBursar: plenty, depending on cost of living in their area. Here in NC, I could do it on the well less than 50k I make.
Just a thought, but if you're driving around in a "clunker" from the 70s, AND make less than $50k, that's probably the reason right there why you're still driving the clunker. So, a government carrot on a stick is finally going to push you over the edge and convince you into voluntarily going into debt to get a new car?
If you can't pay cash for the car, you don't need it and you can't afford it.
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@K-Bo: I'm wondering where all of these people live that they think <50k a year is that bad. Maybe if they said <$30k I would agree, but I'm doing OK with $40K here in Michigan.
Though it does make you wonder how much they think about cost of living when they set these numbers.
@Skin Art Squared: I'm driving a clunker from 1993, no radio, no ac. I have enough money in the bank to buy a new car, I just haven't yet because mine is reliable, despite not being pretty or fun. I have accepted though that it might not be reliable too much longer, and if it qualified for c4c, I would totally take advantage in order to get the $4500 credit, instead of the $700 I'll probably get when I sell it. So yes,there is a reason I'm still driving the clunker, because I'm frugal, and that's the same reason I'd take advantage of the chance to get something more reliable ( without getting myself into debt ) if my car qualified. I'd be stupid to turn down the money since I know my car can't have more than 1-2 more years left in it.
@K-Bo: What were your plans before the government started handing out candy? Drive the clunker till the wheels fall off?
@K-Bo: Thats something people here in NYC are unable to wrap their head around. Making twice as much here is just enough to live somewhat comfortably, but nothing even remotely lavish.
@Tiber: From what I hear about housing prices up there, someone lucky enough to have bought a first house recently could afford a good sized house and a car and still put some away on what you make. I'll admit that in the mid 40k range here in NC I sometimes have to say no to goodies like big screen tvs and new computers every 2 years, but I still live comfortably, and put away plenty of money for future car payments, house down payments, and emergencies.
Why not just make it first come, first serve? I don't see why there has to be any extra restriction on it.
@undefined: I thought the House already adjourned, making amendments impossible, without reconvening the House, and passing a reconciled Bill with the amendments.
@Skin Art Squared: still the plan, if you didn't notice, I said it doesn't qualify, gas millage is too good. For right now I'm keeping an eye out for a deal, if I see something I really love for a good price, I'll go ahead and buy new. Otherwise, yes, I'll drive it till the wheels fall off, then pay cash for a new or newish civic or accord that will last me another 10 years.
@Rectilinear Propagation: Because the gov't is probably figuring out that alot of wealthy people are trading in their 3rd or 4th SUV/truck for a new car. These are SUVs/trucks that are relegated to teen drivers in the family or for pulling a light boat or going to the home improvement store for landscaping bricks. So the program is not really helping to remove the worst cars because those drivers cannot afford new cars anyhow. These people are trading cars/trucks which would be idle anyhow.
@Tiber: It depends on where and how you live obviously. When your rent is $5500 a month and your electric bill is $1500 a month, then $50k a year simply will not do.
I know, I know. Move to a tiny studio apartment and eat Top Ramen in the dark. Well, not everyone wants to live that way.
Hooray tax the rich to buy cars for the poor. Excellent idea. /BOO
This shows the shifting purposes of the CARS program. It was initially to get better fuel economy, then it was to spur car sales, now it is to help lower middle class people afford cars? Stick to one reason. Its becoming the Iraq War of stimulus plans - we don't have a real reason other than we want to do it.
@K-Bo: You're absolutely right, however, the reality is, you're in the minority. The vast majority of people in this country are financially irresponsible, without a budget, in debt, and they buy things that they can't afford.
And I'm tired of the government setting arbitrary income limits, when what really matters is the disposable income the people have. I make $75k a year, but after student loan payments and health insurance, my take home is more like $45k. But, the government thinks I'm raking it in, so I get no government assistance on anything.
@Shawn4168: True, which is why I dislike programs like this in general. They are great when they give a boost someone who is actually trying, and just needs a little help to be self sufficient. Instead they become an excuse to continue the irresponsibility.
@K-Bo: Its hard for me to agree with that considering I live in NYC. 50K is not enough to afford rent, car payments, car insurance (which is high especially if you live in Brooklyn or other boroughs with high accident rates), food, metro card (or LIRR/Metro North ticket), parking (if you drive to work or parking tickets just in case you didn't wake up early enough for alternate side street parking) and clothes.
It would have made sense at the beginning. Can we just kill this thing already?
So...I need to bring in my tax returns to the dealership? Dumbest thing I ever heard. How else can they verify since if a S-O isn't applying for the loan there's no way to verify total household income since the other person wouldn't have to show any papers.
"Comprehension fail"
No , not comprehension fail . Bitter resentment . I'm just a little bit bitter that I have to go to work and pound sand so that someone that makes a few hundred dollars less than me can get their hands on $4500 of my tax money to buy a new set of wheels. That instead of planning and saving and budgeting like I have to do to buy a new car , even more resentful because this is NOT the way that this program was presented ,implemented and sold to the taxpaying public.This establishes a means test for what was supposed to be a method to get gas guzzling cars off the road.
Anybody else out there resentful that wood for brains here thinks that some politician should decide if you "need" governmnet help to buy a car ?
That's great. Not only am I penalized for being responsible enough to buy a fuel-efficient car (so no cash for you) and not over-extending my credit when I bought my house, now they tell me that I'm making too much money. According to Obama, I guess I'd be a lot better off if I'd overextended my credit to buy a Hummer, slacked off on my house payments, and gotten fired.
Socialism: it's not just for Sweden any more.
One thing I've learned is that it appears a lot of people think new cars today are overpriced by $3500 to $4500. Perhaps the auto industry can learn something from this as well. Not likely they would, but I thought it worth pointing out.
Now its just another welfare program. Terrific!
this makes no sense. under 50K or 75K per year they are not going to be able to afford the car. Congress obviously does not want the program to keep going because it makes them look silly since it is working while the actual stimulus plan has not done much as of yet.
See what happens when you put money in the hands of the consumer? You get results.