The United Kingdom Adopts a Plan for Automobile Bailout Similar to Steve's Plan

Late in December 2008 I developed a plan, which I called Steve's Plan, to bailout the United States automobile industry and published it on Associated Content December 30, 2008. The basics of the plan was to give each American tax payer a chance to win a $10,000 voucher each for a new car made in the United States. The odds of winning would be pretty good since instead of giving GM $50 billion and Chrysler another $15 billion, 1 million vouchers for $10,000 each could be distributed to the tax payers, who are after all paying for the bailout via their income taxes. This plan would cost only $10 billion in total and would take a million cars out of domestic inventory. It would also provide the money needed for US auto manufactures to build new and better cars which would help them in the future as well.

If in fact we gave out $65 billion dollars in vouchers, our bailout total to GM and Chrysler, instead of $10 billion, there would be 6.5 billion vouchers available. This would have wiped out nearly all excess inventories of the two companies as well as given the consumer a tangible return for their tax money.

In May 2009 the United Kingdom adopted a very similar plan with only two exceptions. The amount of the vouchers would be only 2,000 British Pounds or about 3,000 to 3,500 US dollars instead of $10,000. The cars turned in would have to be purchased before August 21, 1999, road-worthy and then scrapped. My source is "UK Launches Car Scrapping Plan to Boost New Car Sales", by Robert Barr, Associated Press, May 18, 2009. The second part makes sense since it would reduce the number of cars on the overall marketplace. The first part, a $3,500 voucher instead of a $10,000 voucher might not be enough money to motivate a large number of citizens to take advantage of the offer.

Still this is close enough to Steve's Plan to help bailout their auto industry. Please read my article "A U.S. Automobile Industry Bailout We Can Live With" to verify the plan's similarities and differences.