Cash for Clunkers 2: The Return of Government Motors

Ready for another cash for clunkers program? It looks like General Motors is attempting to replace its own consumer incentives with tax payer money. The car company, bailed out of bankruptcy in 2009 by the American tax payer, appears to be turning the government into an automatic rebate provider.

The Obama administration and their friends on Capitol Hill are floating around a proposal to change the $7500 tax credit for green vehicles. This change can be found not only in President Barack Obama's budget but also a bill proposed by Senator Debbie Stabenow, Michigan Democrat.

Edmunds.com, a 45 year old trade magazine company that provides automotive information, posted a Department of Energy document listing the department's funding highlights. The proposed Obama Budget, changes the existing $7,500 electric vehicle tax credit “into a rebate that will be available to all consumers immediately at the point of sale."

According to Senator Stabenow's website, her proposed legislation, known as the "Charging America Forward Act" (S.298), "will provide consumers with a rebate worth up to $7500 for plug-in electric vehicles at the time of purchase."

Essentially, if one were to buy a $41,000 Chevy Volt, the buyer gets a $7,500 coupon, so the final price is $33,500. In the end, the auto dealer assumes the risk of the government giving them this tax credit.

It is pretty convenient that Ms. Stabenow, who represents a state where GM is headquartered is pushing a bill that is also supported by Edison Electric Institute, whose president was loaned a Chevy Volt, Eaton Corp: the sole American producer of car recharge systems, and Battery Electric Vehicle Coalition, a lobbying group for the electric car industry.

In fact, Department of Energy's David Sandalow told Bloomberg News in February the insta-credit would operate the “same way the 2009 ‘Cash for Clunkers’ program worked."

The Detroit News reported Vice President Joe Biden said at an Indiana battery assembly plant, "You won’t have to wait,’ it would be like the cash-for-clunkers program."

GM is likely the most excited about this instant credit plan. “General Motors supports the instant credit saying the bill “integrates all of the components necessary for successful acceleration of electric vehicles in the marketplace," The Detroit News reported.