Friday, June 19, 2009

SC6's Verdict: This Deal Is a Clunker ...

Yeah It's Cool, But What Kind of Mileage Does It Get ?

Excuse if my thoughts are a little jumbled tonight. The heat and a lack of sleep this week are taking it's toll, but we'll blow out one post for you tonight. Actually, the car we're showing runs on biodiesel... But for most of us, the cars we have run on straight gas.

We're pretty hard on Washington, DC most of the time, but thy usually deserve it. Why because they always write legislation that they say is for our benefit, but their true motivation is to benefit their providers, and save their own asses. With that in mind, we salute Senator Debbie Stabenow of Michigan....

When you think of Michigan, you think of Detroit, and then you think of crime, smell, and massive unemployment. Wait, I mean you think of Detroit, then you think of CARS.... Yeah, that's right. the crime and smell are right after that. We all know what a hole the American auto industry is in right now. The problem is that Detroit spent the past 30 years making bigger, inefficient trucks, and a crappy, plasticky fleet of passenger cars. Washington has spent billion getting them out of water, but for Stabenow, that isn't enough....

Stabenow wrote the 'Cash For Clunkers' program to try and boost US auto sales. Here are the nuts and bolts of the program. If you own a car that gets 18 MPG or less and you trade it in for a new car that gets 22 MPG or more, you get a $3500 voucher. The same goes if you trade in a truck for a new one that gets a mere 2 MPG more. If you buy a car with 10 MPG, or a truck with 5 more MPG, you get $4500. Seems like a lot of green for buying a car, isn't it? It is. If you got the car with the extra 4 MPG's, at the normal driving rate, you would save about $375 a year in gas, so they're paying for nine years worth of the gas saving. The truck would be 18 years worth - about 5-10 years longer than you'll own the truck. While it may seem like a great deal, it starts the same problem that got us here....

What got us in the decline economically that we're in now? Overspending. Buying crap that we don't need, and worse, what we can't afford. Stabenow isn't worried about Americans running up excessive debt and putting themselves back into a hole right after they got out of it. She just wants to funnel as much of taxpayers money into Michigan as she can. She found out that even $40 billion doesn't put a nick in Michigan's problems, so now she's going after the big bucks. She's tried to design a plan that drives consumers to the dealership like lemmings to the sea, or moths to a flame. The moth usually gets burned.......

The ironic part of Stabenow's plan is, like most legislation, the end result will probably be much different than they intended. The plan is supposed to benefit Detroit, but when Americans think of fuel efficient cars, where do they turn? You guessed it - Japan. Buyers will flock in droves to Toyota and Honda, and all of Washington's and YOUR money will likely end up overseas, to the tune of another $1 Billion tax dollars. Nothing like financing the guys who ruined your industry, isn't there?

Of course, this plan will probably be great for my business. But even I can see that getting the Average Joe to buy a house and and a car with $11,000 in tax credits is stupid. Good luck comign up with that extra $700-800 a month in cash, and I'll see you back in bankruptcy court in 2011 !!! I'd tell you to call your Congressman or Senator, but it's too late. It's already passed both houses, although the Senate bobtailed it onto the War Spending Plan this week, and it's waiting on Barack Obama's signature.

Folks, you buy a car or house because you need one and you can afford one - not because you get a tax credit. That is how you get steady, sustained growth. Someday, DC will learn this... Class is over, Professor Reino needs a good night's sleep.....

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3 comments:

mg said...

trying to copy Europe

Greeleyville mg said...

by the way you called that Chick yet

Mike Reino said...

No, we chatted on Facebook a couple times. It would probably be better if we do what we planned on the first time in a little bit..