June 10, 2009 3:29PM

Cash for Clunkers Lesson: How to Use the $$ to Buy a Gas Guzzler

My son’s station car is an old Ford Explorer AWD which, despite being a V‑6, was rated at about 15 mpg. Approaching 100,000 miles, the SUV’ s resale value is very low.


The House approved a bill to give him a $3,500 voucher to buy a car that is supposed to get only 18 mpg, or $4,500 if it gets 20 mpg. Only 18 – 20 mpg? That’s not moving us much closer to President Obama’s pie‐​in‐​the‐​sky 35.5 mpg goalpost is it?


Consider how easy it would be to game this giveaway program by using that $4,500 voucher to buy a big SUV or V‑8 muscle car.


First of all, with Chrysler and GM dealerships folding, it should be easy to buy a mediocre Chevy Cobalt or Dodge Caliber for about $10,000 more than the voucher.


What you do next is sell that boring econobox, even if you end up with $1,000 less than you paid — that still leaves you with $3,500 of free money, courtesy of taxpayers.


As this process unfolds, the flood of resold small cars will make it even harder for GM, Chrysler and Ford dealers to get a decent price for small cars, because of added competition from new cars being resold as used.


That’s their problem, not yours.


So, take the $9,000 net from reselling the crummy little car plus the $4,500 from Uncle Sam. Then use that $13,500 to make a big down payment on a used Cadillac Escalade, Toyota Tundra pickup or Corvette.


File this under “unintended consequences” (my own file is running out of space).