By today’s standards it’s small potatoes but a billion potatoes here and a billion there and pretty soon … well you know the quip. I’m talking about the “cash for clunkers” bill that was approved today as part of an add-on to funding for the Iraq and Afghanistan wars.

This has been billed as an environmental initiative to get gas guzzling older cars off the road and provide an incentive to buy more fuel efficient autos. It is nothing of the sort. It’s basically a $1 billion (estimated cost) subsidy to the auto industry.

Here’s how it works.

First, you get $3500 if you trade in a car that gets less than 18 MPG for a car that gets 22 MPG or more. If the new car gets 10 MPG more than the trade in you get $4500. So far so good.

If you own a SUV, pickup truck or minivan you get a better deal. If your vehicle gets less than 18 MPG you qualify for $3500 if the new vehicle you buy gets 2 MPG more than the one you trade in. If it gets 5 MPG or more than that old truck you get $4500.

A couple of things that were left out. Some wanted a rebate for anyone who traded in a car that got mediocre mileage, say 20 MPG, for one that got 35 MPG. Those same proponents also wanted to make used cars available so someone that is driving around a 25 year old Impala might be able to trade up to, for instance, a 2005 Toyota. That would get a real stinker off the street and might be affordable with the rebate for the poor guy that can’t afford a new car. Those were evidently too “green” for the Senators.

So for all of the bluster you’ll hear about this keep in mind that it’s structured to help the auto companies sell more SUV’s, minivans and pickup trucks. After all that’s where the money is made in the car business and we, the taxpayer, are now in the car business. I can’t figure out exactly how we come out ahead providing a subsidy for the companies we own but I’m sure Congress has assured themselves that it’s a net benefit to someone.

On, just one more little wrinkle. In case you think this is the perfect time to dump that Hummer you bought during a testosterone rush last summer forget about it. Any trade-in is worth nothing. That’s right, nothing, zero, zilch, nada. Trade-ins can’t be resold, they have to be scrapped.

Sorry!

more: here