Pressure is rising to do monetary bail out of the Big 3 automakers in Detroit. There are good reasons for and against it, but the various proposals all seem to center around loans to the corporations whose management teams couldn't see past the next quarterly statement and didn't invest the huge profits made from the SUV trend in newer technologies or better vehicles for when gas is higher than $1.50 a gal.
Are these the best people to manage billions of tax payer dollars? I don't think so.
Any expenditure of our tax dollars or a commitment to future dollars should serve several purposes, not just keeping companies afloat. Any bail out must be part of a comprehensive Energy and National Security Policy....in that the drastic reduction of importing foreign oil is an Economic, Environmental, and National Security necessity for the United States.
To address those necessities, a better Detroit "strengthening" (instead of bail out) has to address each of those necessities in the very near term, not "when the technology is ready" time frame.
What would do it?
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With close to 62 million cars in the US fleet, increasing the MPG and decreasing the emissions would have a cascading effect in all three necessary concerns. The quickest way is to replace the aging US fleet with newer models.
How to do it?
Why not direct credits to consumers for trading in their older cars and light trucks for newer? Anything getting over 24 mpg?
A $5000 credit on 1/4 of the fleet would cost roughly 77.5 billion. Much less than the proposed bank plans and could greatly reduce demand for gas and auto emissions. Plus that would increase demand for autos, give automakers, parts makers, dealerships, etc... some extra room to get ready for the next few years. The govt could structure it so that its $10,000 only on cars 10 years or older...etc... I doubt there would be a run to the dealerships to trade in 15.5 mill cars, but even a portion of that could reap great returns.
The one thing to make it work is that the traded in older models must NOT be put back in the market. They must be crushed and recycled. To put them back on the road defeats the purpose.
The only real question becomes, how deep is the US govt's reach into this commerce. I would say, up to the elbow.
If they are going to kept in business with our money, then Washington should have a final say about how its spent in the companies; executive compensation, research directions, etc... Also is it limited only to automakers based in the US or do others take part? That is a political question, but the other points are obvious in their benefit to the Nation as a whole; which should be the only criteria when dealing with Federal Dollars.
Ridge