WASHINGTON -- A veteran Republican lawmaker says it would be better for the federal government to give $5,000 to every new-vehicle buyer than to pour more taxpayer money into struggling companies.
If more people buy new cars and trucks, the economy will restart itself, Rep. Donald Manzullo, R-Ill., said today.
Manzullo made his remarks during a House Financial Services Committee hearing on the progress the Bush administration has made in using $350 billion in federal funds approved last October to help rescue financial institutions.
That funding includes the first installments of $17.4 billion in emergency loans for General Motors and Chrysler LLC.
This week, President Bush, at the request of President-elect Barack Obama, asked Congress to release a second $350 billion in rescue funds. Congress has 15 days to respond to the request before it is automatically approved.
Many lawmakers are complaining about the way the first $350 billion has been used, mainly by the Treasury Department to invest in financial institutions. Rep. Barney Frank, D-Mass., chairman of the House committee, is proposing a bill that would overhaul the rescue program.
Manzullo, a member of the House committee, said simpler measures such as money for car buyers would do more to get the economy moving.
Manzullo aides say he plans to propose a $5,000 tax credit for every buyer of a new vehicle in 2009. The provision would apply to vehicles priced at $50,000 or less. It would be available to households with annual incomes of $250,000 or less.
The bill would provide $2,000 tax credits to buyers of used vehicles. The new- and used-vehicle tax credits would be reduced to $2,500 and $1,000 respectively in 2010.
There are tall odds against the proposal becoming law, Still, it reflects the sentiments of some prominent auto dealers who have told Automotive News that government should focus on stimulating consumer activity.
Manzullos office calls his proposal a free-market solution that involves the American people in the recovery effort.