Auto Bailout Designed as Rebates for Buyers?
[L]et's get back to basics: what are we trying to accomplish, anyway? Presumably, Washington's primary goals are to save jobs and to jumpstart the economy. Like it or not, getting people to buy cars is one of the most effective ways to get an economy moving. Cars have what economists call a multiplier effect, perhaps the greatest of any product, because every car that's purchased creates a cascade of further stimuli -- not just to those who make the car, but also to those who repair it, fuel it, outfit it, wash it, and so forth.
But as Steve notes:
Reading the piece, I had a couple of concerns about rewarding a flawed Detroit business model, and adding millions of cars to the road that aren't exactly efficient, environmentally-friendly vehicles.
So how about making it a green program? In the early 70s when California was first seriously addressing how to clean LA's dirty air, they had a program where they subsidized the purchase of newer, cleaner cars for polluting cars in order to get the really bad offenders off the road. And in 2007, Texas started a program that provided a rebate to get the bad cars off the road.
We could have a program that does the same by targeting the worst mileage cars with cleaner, more efficient cars by a subsidy that was calibrated to the income of the buyer. The less well off with a really bad car could get a much better car and that would go a long way to making their overall costs go down while cleaning the air and helping prop up the auto industry.