Laguna Beach Von

Saving the Auto Industry: The Gush-Up Proposal

No offense, but prior to viewing your bio I assumed the Gush Up Proposal was gushing with journalistic satire. As to why, I’ll begin at the aptly named beginning:

1) Market values of used vehicles are highly variable, have zero correlation with weight and fluctuate regionally. A 1998 F-150 is worth considerably more in Omaha than Los Angeles. If the price disparity is greater than the transportation costs of shipping the F-150 to Omaha it would most likely be sent there for resale.

2a) The scrap price for a vehicle is very low and is mainly reflective of the value of the remaining working parts of the vehicle and demand for those parts. The crushed metal value is only a small proportion of the price. If there were no older vehicles in disrepair remaining in use there would be no need for these scrap parts. Your proposal for the government to pay an unrecoverable premium above not only the resale value of the vehicle but greatly above what it would receive in return for the scrap value multiplied by the hundreds of millions of eligible vehicles could cost the taxpayers well over half a trillion dollars.

2b) Assumptions: US population 300 million; 80% of driving age (240 million); 90% own a vehicle (216 million); 72% registration percentage of vehicles ten years or older (155.5 million); $3500 Avg value of aforementioned F-150; 10% estimated proposal ‘market value premium’ (+$350); $500 highly generous scrap price: Government outlay would be $3850 - $500 X 155.5 million vehicles = $521 Billion.

3) Providing these monetary incentives to only those with eligible vehicles would exclude the poorest who do not own a vehicle, instantly making them worse off in comparison to the majority of the population.

4) Setting price by the pound would unfairly value similar yet older vehicles equally.

5) The supply of scrap and/or recycled materials would quickly overwhelm any reasonable demand, leading to the limited number of junk dealers suddenly having more overhead than banks due to the need to acquire vacant storage space for the huge influx of vehicles.

6) Many vehicles over ten years old are owned outright and no longer being financed. The Gush Up Proposal would force these owners to purchase newer, more expensive vehicles creating for most the increased expense of a monthly car payment during times of economic uncertainty while greatly enriching the finance companies that helped create the current uncertainty.

7) The main reason taxes are withheld from pay is the inability for many to save and plan. After selling a vehicle to the government, many would treat the newfound money as a windfall and would not necessarily purchase or be able to purchase a newer higher priced replacement, eventually leading to an increase in need for public assistance.

8) The supply of used vehicles available for sale that are less than ten years old is substantially less than the demand that would be created, inflating sales prices and ultimately transferring any money upwards to the owners of these vehicles.

-- The Gush Up Proposal in action: Tax revenue is provided to owners of older vehicles who then use all the funds to help finance the purchase of artificially overpriced ‘newer’ used vehicles. The sellers of these vehicles then use the funds to help finance the purchase of a new vehicle. Winners: Bankers, vehicle dealerships, vacant landowners (Those at the top); Losers: The majority of the population who are now making monthly payments on overpriced replacement vehicles and those who could not afford a replacement vehicle and are forced to find new employment closer to home.

In light of the above, I would like to state that I am hugely in favor of implementing the Gush Up Proposal. I plan to purchase all of the oldest and heaviest vehicles I can locate, re-sell them to the government and buy a few sports franchises and islands with the proceeds…