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Crossposted from Age Of Pericles

A Potential But Unlikely Victim

Lovers of aged steel nationwide are up in arms about a new measure championed by the UAW and the ever congruent President. The bills, known officially as H.R. 520 and S. 247 but colloquially as “Cash for Clunkers”, both propose issuing a voucher to consumers in exchange for the destruction of their old (yes, both bills capitalize the term) High Fuel Consumption Vehicle. Overall, the bills are just another species of how myopic government reaction can have far-reaching negative consequences in unexpected areas.

H.R. 520, the House bill proposed by Steve Israel (D-NY) with 9 additional sponsors, offers a $4,500 voucher towards the purpose of replacing a High Fuel Consumption Vehicle (a vehicle that gets less than 18 MPG) with a new model year Fuel Efficient Vehicle (intricately defined here). Were the bill to be passed and signed today, the $4,500 voucher would be applicable only to cars manufactured 7 years or fewer before the date of voucher issuance. The value of the voucher is inversely proportional to the temporal distance between issuance of voucher and date of vehicle manufacture, which is to say that owners of most cars of interest to classic car aficionados (vehicles manufactured before 1998) would receive a voucher worth only $2,500 towards the purchase of a new Fuel-Efficient Vehicle. Of course, the bill is terrifyingly complex, with exemptions and caveats left and right. What’s important is the definition of a vehicle eligible for a voucher:

(6) ELIGIBLE HIGH FUEL CONSUMPTION AUTOMOBILE- The term ‘eligible high fuel consumption automobile’ means a high fuel consumption automobile that, at the time it is presented for participation in the program established under section 3–

(A) is in drivable condition; and

(B) has been continuously registered and licensed to operate in any State for a period of not fewer than 120 consecutive days for operation on public roads.

Thankfully, the eligibility requirements disqualify most classic project cars. Few vehicles manufactured prior to 1984 (upon which official antique status is conferred) are both A. driving and registered and B. worth less than the $2,500 prescribed for a vehicle of such age. By definition, parts cars do not meet that standard. As such, it is unlikely that H.R. 520 would make a significant impact on the availability of project vehicles or parts. S. 247 is effectively the same bill

Regardless of the potential impact H.R. 520 may or may not have on the automotive restoration industry, it’s a bad idea because of its sure impact on low-income families. Many High Fuel Consumption Vehicles manufactured after 2002 (7 years between issuance of voucher and manufacture of vehicles translated to $4,500 voucher) still run reliably, but are worth less than the $4,500 offered via voucher. As such, no High Fuel Consumption Vehicles (read: SUVs and minivans which are great for carrying families) will be available for cash-strapped families already reeling from the recession for less than $4,500. Preliminary estimates place the cost of the bill at between 1 and 2 billion dollars per year. Essentially, taxpayer cash is going to pay for Washington’s darling clunkers, notably the UAW, soon-to-be owners of 55% of Chrysler. So goes the law of unintended consequences, and so too does Congress’ chronic myopia strike blow after blow at the prosperity of American families. Furthermore, fuel savings created by the program are projected to be between 40,000 barrels and 80,000 barrels of motor fuel per day, a scarce 0.3% of current (and ever-increasing) daily petroleum consumption. The Cash for Clunkers bill, like much market-tweaking legislation that comes out of the Capitol, doesn’t measure up.