25 Replies to “$12 billion in Tax Breaks for Auto Purchases”

    1. By my count, there was a $25 billion bailout in October, another $25 billion in Jan and now this $11.5 billon.

      So about $61.5 billion.

      1. To be fair much of that money is in loans which are supposed to be paid back with interest. When was it, back in the 80’s that the government did a similar thing with Chrysler? That turned out pretty well so there is precedent for this to work.

        I think the government was pretty generous with the railroads back in the 70’s when the freight system was on the verge of collapse. We may not have squat for passenger rail but our freight system is the envy of the world.

      2. Yeah, but the interest rate is 1%, way lower than inflation. If I got that loan, I’d take it and turn around and buy T-bills, gauranteed return!

      3. Could you explain how this could happen? Seems unusual since T-bills are supposed to be a safe investment.

      4. No one would buy treasures with negative interest rates, you’d be better off putting your money in a bank account with no interest. I think you mean that t-bills yields were negative if you take inflation into account.

      5. If you have enough money sloshing around, you absolutely might buy T-bills with negative interest rates. If you’re the Chinese Central Bank with $1 trillion in dollar reserves it’s not like the FDIC is going to bail you out if the bank fails.

        Anyway, I think it was basically an anomaly, something like a -0.01% yield that was quickly arbitraged away.

      6. China buys it’s t-bills directly from the feds, and they get the coupon rate. Back when the stock market was tanking 1000 points a day, I remember T-Bills getting negative yield. But the treasury never issued t-bills with negative coupon rates.

      7. I’m fairly sure the negative rate was a yield and not a coupon rate.

        Anyway, the FDIC comment applies to anyone with serious money. In a high-risk environment a “zero-risk” 0% yield is a pretty good deal, unless you think the dollar is going in the toilet.

  1. I think this guy put it best:
    http://yglesias.thinkprogress.org/archives/2009/02/late_lunch_open_thread.php

    “So, I was thinking we could start with a carbon rebate: money for polluters of all stripes, including barbecuers and illegal drag racers. Also, money for women who carry their pregnancies to term against their better judgment, and money for doctors who misdiagnose tumors on purpose. Failing that, there’s the Return to Roosevelt option of inciting World War III.”

  2. OF course there’s no fuel efficiency requirement in the bill, so the Feds are going to give cash to people who buy hummers.

  3. Hey, if you’re out of work what better time to buy a new car… Road Trip :=

    I can see that if people went out and bought more built in America cars it’ll help the auto industry. Of course if those cars are from Kia, Hyundai, etc. it won’t put anybody back to work except maybe cashiers at the AM/PM.

    $18.5 billion plan sponsored by Georgia Republican Senator Johnny Isakson offering a tax credit for homebuyers worth $15,000 or 10 percent of a home’s purchase price,

    Here’s something aimed at the housing industry. The underlying reason behind the collapse, right? But who’s going to be in a better position to benefit; someone who lost their job or someone with the money to speculate in real estate. But if prices rebound that will help everybody who’s upside down in their mortgage and especially the banks who hold loans for more than the property is worth. Great, unless say you’re one of those people who were priced out of the housing market by the last speculative bubble.

    “There is plenty of room to cut in this bill,” Senate Minority Leader Mitch McConnell, a Kentucky Republican, said today. “This isn’t Monopoly money — all of it is borrowed — borrowed money that the taxpayers will have to pay back at some point.”

    Nebraska Democratic Senator Ben Nelson has proposed cutting “tens of billions” from the plan he says would do little to boost the economy.

    Line item veto anybody?

    1. That housing item is the most ridiculous item I’ve ever seen. We’re in this mess because our economy is doing the wrong things: building too many cars, building too many house. But the idiots in congress want to prop those industries up.

      next we need a bill that encourages bankers to give loans to people who can’t afford them and to give a tax break for those who invest in ponzi schemes.

      1. > next we need a bill that encourages bankers to give loans to people who
        > can’t afford them and to give a tax break for those who invest in ponzi schemes.

        Why? That would be redundant legislation and might muck up the great system we already have ;-)

        Those idiots aren’t so stupid. They’re spending billions on buying votes (or securing “speaking fees” and limo service) at a time when most of the country believes that more deficit spending can’t happen fast enough. Who cares what it’s spent on; it’ll restart our economic engine.

      2. So will shooting nitrous oxide into the cylinders, but engine life goes down dramatically, just like these kneejerk reactions to fixing the ecconomy will do in the long run.

  4. I know this might seem crazy, but there are places in this country where people have to use cars to get around; not everyone in this country can rely on public transportation. And the people that need to have cars also need to buy new ones from time to time.

    Spend any time in rural America and the “Cars are Evil” falls pretty flat. I suppose we should make cars really expensive so everybody will walk, bike, train or bus around their towns but that is not a realistic scenario for many communities in this country. If you live in a town like Aledo, Illinois, or Mount Pleasant, Iowa, you drive. No one is building light rail in rural communities and bus systems are either non-existant or very bare bones.

    Perhaps a tax credit like this should only be available to those in rural areas instead of dense, urban ones (although you could certainly have some constitutional questions in that case). Or maybe this type of credit needs to be coupled with higher fuel standards or other incentives to create more efficient or cleaner cars. But I think the idea that we should never do anything that would assist people in buying a car is very shortsighted. Some people in this country drive 15 or 20 miles accross farmland to a job in another town. Transit isn’t a realistic option.

    As someone that has lived in some of the smallest towns in this country and in some of its biggest cities, I’m disappointed that we forget that not everyone lives in areas with public transit options. And not everyone that buys a car is evil or stupid or just wants an SUV…perhaps they just need a way to get from point A to point A?

    1. Yeah, some people live in areas where cars are the only feasible option. However, they chose to live there. Why should I be forced to subsidize their lifestyle? The comments here aren’t saying they should be banned from buying cars, they are saying the government shouldn’t socially engineer us towards buying cars.

  5. I don’t think it’s crazy to have cars and you don’t have be in rural America to need one. Way out here in Bellevue we have one bus in walking distance; the 889 which gets you to Sammamish HS in the morning and home in the evening. I’m all in favor of helping the auto companies because I believe they are critical to maintaining a manufacturing base in this country.

    I have a problem with a tax cut for new car buyers. First, most of the new cars sold won’t be from Chrysler or GM which are the companies most in need of federal assistance. Foreign brands that are assembled in the US will help employment but sales of cars made in Germany, Korea, Japan, etc. actual depress sales of US made cars.

    Another objection is who the tax cut targets. Some folks that buy new cars are wealthy enough that they didn’t need the extra incentive anyway so the only stimulus will be trickle down Reaganomics. Another big group that buys new cars are those sucked in by the buy now pay five times more later. A car depreciates at least 30% as soon as it drives off the lot but lured in by nothing down drive home with a rebate incentives people who “can’t afford” a one or two year old car jump on the revolving credit merry go round. This sort of stimulus for the credit industry isn’t sustainable.

    An across the board tax cut makes more sense. Let rural America (like Bellevue ;-) decide between a new car or a new tractor.

  6. Whether you think cars are evil or not – I don’t, I own two – a tax break to encourage people to buy new cars that may or may not have been made in America is not good stimulus. If you convince someone to buy an import instead of a domestic car because you’ve just made it cheaper by giving them a tax break have you helped the economy?

    The tax tax break home purchasing is a terrible idea too. If you decrease the demand for rentals and increase the demand for new homes, have you helped the economy?

    These are the parts of our economy that are OVER producing, eg, we make way too many cars. 50% more cars were made in 2007 than were made in 2002. That’s too many. A ton of houses were built too. Those were too many. You can’t solve that problem with tax breaks.

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