I had an idea forwarded me the other day by a reader. It's somewhat on the level of the Federal Reserve study a few years ago that suggested it would be cheaper to buy every MetroRail user a car than it would be to pay for the Metro.
It's interesting, and at least worth discussion, as it reminds us that bailouts are odious in all their forms, staining the giver and the recipient equally.
I believe that I have figured out the best way of saving the American automobile industry at the least cost to the taxpayer. Rather than giving "The Big 3" automakers billions of dollars to stay afloat I believe that paying every American citizen $10,000 for every fuel efficient 4-cylinder General Motors, Ford and Chrysler car they buy over the next 3 years would be the least expensive and most productive way of saving those companies and the jobs at those companies and dealers.
One, if most Americans were able to buy a new car with a list price of more than $20,000 for $10,000, or $15,000 car for $5,000, we'd probably see a surge in car sales that should quickly bring our economy out of recession.
Two, we'd probably see less gasoline used, replacing cars, SUVs and trucks that used 6 and 8 cylinder engines to get people around.
Three, such an action should result in used car prices falling through the proverbial floor, which could result in a government program being set up to buy large cars, large SUVs and large trucks and shipping them to foreign markets for sale there if they still have some useful life in them. Such a move could offset the cost of such an action, including paying a premium to the owners of really big cars, SUVS and trucks, which have substantially more weight and mass than cars such as the Honda FIT or a Toyota Prius.
Four, people would buy new cars for their kids rather than having them driving less safe and not as reliable older cars. This should mean fewer kids injured in car accidents, and fewer car repair bills for their parents.
Five, only people with $10,000 or cash and/or good credit would be able to take advantage of the opportunity to get a new car for 1/2 price. But the collapse of used car prices caused by such a scheme should result in many reliable used cars good for years of driving being sold for very low prices. So many credit-challenged Americans would suddenly be able to acquire dependable wheels for a relatively cheap price.
Six, such a program would result in a lot of sales tax being paid to state governments right away, with personal property taxes paid to county governments increasing sharply the following year.
Seven, like any car; these cars would eventually need repair in 2, 3 or 5 years.
Eight, if the American public choses to pay $20,000 for an imported car rather than $10,000 for a similar American-made automobile, we may have proved that saving the big 3 is impossible.
One, if most Americans were able to buy a new car with a list price of more than $20,000 for $10,000, or $15,000 car for $5,000, we'd probably see a surge in car sales that should quickly bring our economy out of recession.
Two, we'd probably see less gasoline used, replacing cars, SUVs and trucks that used 6 and 8 cylinder engines to get people around.
Three, such an action should result in used car prices falling through the proverbial floor, which could result in a government program being set up to buy large cars, large SUVs and large trucks and shipping them to foreign markets for sale there if they still have some useful life in them. Such a move could offset the cost of such an action, including paying a premium to the owners of really big cars, SUVS and trucks, which have substantially more weight and mass than cars such as the Honda FIT or a Toyota Prius.
Four, people would buy new cars for their kids rather than having them driving less safe and not as reliable older cars. This should mean fewer kids injured in car accidents, and fewer car repair bills for their parents.
Five, only people with $10,000 or cash and/or good credit would be able to take advantage of the opportunity to get a new car for 1/2 price. But the collapse of used car prices caused by such a scheme should result in many reliable used cars good for years of driving being sold for very low prices. So many credit-challenged Americans would suddenly be able to acquire dependable wheels for a relatively cheap price.
Six, such a program would result in a lot of sales tax being paid to state governments right away, with personal property taxes paid to county governments increasing sharply the following year.
Seven, like any car; these cars would eventually need repair in 2, 3 or 5 years.
Eight, if the American public choses to pay $20,000 for an imported car rather than $10,000 for a similar American-made automobile, we may have proved that saving the big 3 is impossible.
The idea is probably not politically feasible, as it doesn't have enough perks to satisfy special interest groups, but it's worth at least thinking about. And it's certainly better than another $25 billions given to an industry in the dubious prospect of generating long-term changes. What do you think? And do you have a better idea?
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