Government’s new plan – Cash for Clunkers


After an extensive process of negotiation and debate, the United States government’s “Cash for Clunkers” program has been officially launched as the Car Allowance Rebate System (CARS).

With this system, you can trade in your older model cars with low fuel efficiencies to receive a rebate of up to $4500 from the federal government toward the purchase of a new, more efficient vehicle. The goal of this initiative is two-fold. Lawmakers hope that the rebates will jump start auto sales while also pulling old, inefficient gas guzzlers off the road. Both foreign and domestic auto dealers are allowed to participate in the program, offering consumers a wealth of options for their new car purchase. Rebates do not count toward your taxable income.

Cash for Clunkers

There are a few requirements that must be met to be eligible for a rebate on your trade in. For example, the car being turned in must be in drivable condition, not more than 25 years old, and must get less than 18 miles per gallon according to revise EPA standards. New vehicles purchased must be less than $45,000 before any options are added and get a combined 22 miles per gallon or better. The vehicle could be produced by any auto manufacturer while it meets the cost and fuel efficiency standards.

Critics are up in arms, claiming that the government should have limited the rebates to new American car purchases only. This would help revive the faltering domestic auto manufacturing industry and help the domestic automakers in their attempts to restore consumer confidence. General Motors, Chrysler, and Ford Motor Company owe several billion dollars to the American government and an increase in sales would help the companies begin to repay some of the taxpayer money in a more timely fashion. Both GM and Chrysler have recently emerged from government-backed Chapter 11 bankruptcy proceedings and are now partially owned by the United States Treasury Department. The Treasury Department holds a 60.8% stake in the new General Motors.

Supporters of the program have said the forcing consumers to purchase domestic automobiles could disrupt the global auto market. Unfair bias shown by the federal government would have the potential to create backlash both domestically and internationally, where American automakers enjoy a hefty market share. Also, many of the vehicles sold by foreign automakers are manufactured and assembled in the United States. Foreign companies currently provide many of jobs with the potential for more in the future. Supporters of CARS claim that shouldn’t be jeopardized through selective rebate opportunities.

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