Stimulus: Bail out car companies by giving the money to consumers

[thesquanderer]

This sounds brilliant to me.

offer a 50 percent rebate check to every purchaser of a new, American-made car produced by any auto company that signs up for a voluntary restructuring program with the federal government. The rebate would be paid by the Treasury Department, and then exchanged for preferred stock in the company that produced the car.

* Giving people a major incentive to buy a new car *now* would be a huge economic stimulus.

* Getting all those unsold cars out of inventory would solve the immediate problems of the car companies.

* Tying the program to a restructuring would address the car companies' longer term issues.



http://www.washingtonmonthly.com/features/2008/0811w.leonard.html

[geckosfeet]

1. I agree that it is the consumer who will drive the economy forward, and

putting $700b in their hands in one way or another will help tremendously.

It is so very wrongheaded to be handing this cash to rich corporations and the wealthy. But can we expect anything else from the bUSh family crime organization?

[MadHound]

2. What would be considered an American-made" car?

A Chevy made in Mexico, a Ford made in Canada, or a Toyota made here in the U.S.?

[thesquanderer]

3. American cars

The author suggested that any "American-made car produced by any auto company" would qualify, if the manufacturer participated in the restructuring program. So only the Chevys and Fords made in the U.S. would qualify, not the cars those companies make elsewhere; and Toyotas made in the U.S. could qualify in theory, except that they have no reason to want to particpate in a government coordinated restructuring that tells them how to run their business.

Like all proposed plans, it's a starting point that could certainly be tweaked. Maybe a Chevy made in Mexico qualifies for some smaller rebate, or maybe the rebate varies with "how" American-made a car is (they have stickers that tell you what percentage of the parts are American, and where final assembly was done, so one could come up with some formula).

But imagine of, for the next 60 days or whatever, people knew that could get a brand new car for 50% off. I think the public response would be enormous, and it would both rescue the car companies and provide a major stimulus to the entire economy, in short order. Much better than giving the car companies money directly, which has no immediate consumer benefit and no immediate major benefit to the economy. That only benefits the car companies.

Also, this was the dollar does double duty, instead of x dollars going to car companies and another x dollars going into some other consumer stimulus program, like the last tax stimulus check, which might have gone to things like paying down debt, which, while a good use of the money for the individual, would not be terribly stimulating for the economy as a whole.