House Adds $2 Billion to Cash for Clunkers

Marcy Wheeler — Fri, 31 Jul 2009 14:45:51 -0400

The House just put another $2 billion into the wildly popular Cash for Clunkers program; presumably, the Senate will follow suit before they leave today.

From the comments made during the House discussion on this, it sounds like the program was wildly more successful than even reported yesterday--largely because (in spite of an arguably crappy design) it is working to do what it's supposed to: get people to trade in old gas guzzlers for more efficient passenger cars. Here's the early pitch from the program:

Early statistics from automotive dealers on the CARS Program, commonly known as Cash for Clunkers, show clunker consumers getting a 69% mile-per-gallon (mpg) improvement which saves them an average of $750 in gas bills a year by replacing their clunker with a new fuel efficient vehicle. "After gas and repair savings many consumers will spend less to drive a new car then they were spending to keep their clunker on the road," says Sharon O'Connell, the director of www.CashForClunkersInformation.org. "If consumers miss their old cruiser they can buy another one with the $750 they save in gas." The organization interviewed some of the largest dealers in the country who have been selling vehicles to clunker consumers for almost a month and their findings were released today in their "clunker report."

According to www.CashForClunkersInformation.org, 79% of clunkers being traded in so far are SUVs, trucks and vans with over 100,000 miles and most are being replaced with new passenger vehicles. The average age of a trade-in model is almost 13 years old, and the average odometer reading is approximately 138,000 miles. The most popular clunker trades are Chevrolet, Ford and Dodge and 84 percent of the new vehicles purchased are passenger cars.

In the sample, 64% of the government funded credits were for $4500 and 36% for $3500. "Lower priced cars have a better chance of qualifying for the larger $4500 rebate because smaller vehicles typically have better mpg ratings," adds O'Connell. The rare exceptions are hybrids that cost more but often qualify for the $4500 because of their higher mpg ratings. "The best deals for the Cash for Clunkers program are the less expensive vehicles that cost $10,000-$18,000. A list of these types of vehicles is available on www.CashForClunkersInformation.org."

Based on a 69% mpg improvement, www.CashForClunkersInformation.org estimates that personal fuel consumption could decrease by approximately 300 gallons per year, reducing personal fuel costs by almost $750 annually at average gas prices. "If this early trend continues for all of the 250,000 sales that are estimated to occur under the program, it will save consumers more than $187 million dollars in gas expenses while also helping the environment," says O'Connell. As a result, the US annual fuel consumption could decrease by approximately 75 million gallons, reducing spending by a total of nearly $185 million on gasoline(1), and cutting CO2 emissions by more than 655,000 metric tons.(2)

I'll post more later about the one thing Republicans have found to grumble about: that dealers aren't getting their money quickly enough (in a program that has existed for a week), and that there has been a significant rejection of claims (which sounds similar to regular rebate woes).

Clare McCaskill, herself from a car-manufacturing state, has her own gripe. According to McCaskill, "forever" is "one week."

clairecmcWe simply cannot afford any more taxpayr $ to extend cash for clunkers. Idea was to prime the pump, not subsidize auto purchases forever.

But for the moment, let's just ignore McCaskill, sit back, and watch government stimulus working the way it's supposed to work.

Awaking From the American Dream

Marjorie Schaafsma — Tue, 13 Jan 2009 11:58:50 -0500

Who’s Dreaming Now?
The American Dream motivates American workers to put in the highest hours of work in any country on the planet – in hopes that they and their families will share in American economic prosperity. In the present economic crisis there are widely shared concerns that the American Dream is slipping away and has become unachievable for many working families. To understand if we are achieving the American Dream – we need to know what core ideas are part of the dream.

The SEIU labor union collected survey data from workers in 2008 to identify values that inspire Americans’ dreams. The SEIU survey identifies two core values that the vast majority of workers (roughly 90%) think are essential to realizing the Dream. Workers want jobs with incomes that enable them to support their families. And they hope to create opportunities for their children that will be foundations for successful lives. Working parents embrace mainstream American social values – work should create financial security and enriched opportunities for children and families.

Obviously working in low-wage jobs that produce poverty level incomes does not enable working mothers to realistically reach for or realize the American Dream. The Dream is far out of reach for the 31.4% of working women who work in low-wage jobs. Poverty level income for a single mother with two young children in 2008 was $18,000 a year – or approximately 29% of the median income. Many mothers of infants and toddlers who are living in poverty work in part-time jobs paying $7.50-$9.00 an hour. These wages produce earned incomes of $7,500 to $11,250 in part-time jobs, working 20-25 hours/week. Full-time, 35-40 hour a week jobs, at these wages produce higher incomes – of $13,125 to $18,000 – very rarely enough income to bring a family of an adult and 2 children out of poverty.

Poverty researchers and advocates believe that the actual income needed to enable a family of 3 to participate in mainstream society – to pay for costs of meeting basic needs, to get access to good education, safe neighborhoods and housing, to gain access to medical care and child care and to build social connections – is nearly twice the official poverty level – or $34,000.
Actually this income is far from sufficient to enable a parent to pay for the market costs of child care for one or two young children.

Under federal guidelines eligibility for child care assistance is capped at 185% of poverty. However, only 14% of families eligible for assistance under these income guidelines receive federal contributions to payments of child care expenses. As a result of this eligibility limit, child care assistance disappears as low-wage working mothers approach earnings of $34,000 a year.

The National Center on Children and Poverty (NCCP) estimates an annual income of $60,000 is necessary to enable a family of 3 to pay for basic needs and pay market costs of quality child care for a young child. As a result women with young children who attempt to climb a ladder out of poverty by developing skills, work experience and earning an income that would bring them into the working poor – earning 185% to 200% of poverty – fall from a “financial cliff” when they cannot pay for the costs of quality child care.

Work Disruptions: Prematurely Ending Child Care Assistance
At this “financial cliff” their child care assistance ends and these working women are far from producing enough income (about $25,000 short) to pay for market costs of child care. So they lose this essential work support and their children lose the developmental opportunities that quality child care provides. Ultimately this ill-conceived disruptive “financial cliff” in child care policy, undermines the abilities of working mothers to establish a job record and income that will enable them to meet the costs of basic needs of their families.

We want to invest our resources effectively to enable working mothers to focus their attention and energy on work. In order to achieve this we need to recognize how important good stable child care is and how disruptive these interruptions in life supports and routines are for mothers, children and employers, when child care assistance disappears.

A goal in making anti-poverty policy for working mothers is to enable them to be responsible for the needs of their children, by becoming reliable workers. In order to do this we need to understand their work lives and recognize the supports they need to realize this American Policy Dream. To be effective, policy has to be grounded in real work experiences of women who are affected by work support policies and who use these social resources to improve their lives.

Will The Ladder Be a Climb Out of Poverty?
Many working mothers who depend on federal child care assistance are looking for a ladder out of poverty. It is frequently impossible for a mother of young children to be in the paid labor force without the work support of child care. But, not all working parents and children living in poverty who are eligible for child care assistance receive it. In fact very few have the advantage of child care assistance.

This is a serious economic and policy dilemma. How do we expect women who are earning incomes that are inadequate to meet their basic needs, to realistically climb out of a pit of poverty? How do we expect their young children to be cared for when work supports of child care assistance disappear? Without access to affordable stable child care – work performance becomes erratic, jobs uncertain and often work does not last. These outcomes defeat the underlying purpose of anti-poverty policy.

Without adequate federal child care resources we undermine the ability of working women to work and put at risk children’s best cognitive and emotional development. This is a social problem. Lack of resources for child care can exacerbate the costs of a cluster of social problems – preparing women with the skills they need to attract good jobs, enabling them to make firm attachments to the paid labor force, and enabling them to achieve incomes that will pay for the costs of basic needs for themselves and their families.

All of these things are legitimate goals of federal anti-poverty policy under Temporary Assistance to Needy Families (TANF) and the Child Care Development Fund (CCDF). But if we abdicate our collective social responsibilities to vulnerable families and very young children that would enable children to be in federally supported child care – we not only betray them. We undermine explicit goals created under TANF for working mothers. The ambitions of working mothers to achieve economically self-sufficient lives can become hollow dreams.

A ladder that working mothers can climb out of poverty – must include financial resources to enable them to pay for good child care for their children. This is a practical reality of everyday life for working parents. We ignore this need of working women and their families at the peril of creating failed work policies.

Without the essential work support of accessible “child care” for working mothers, we will be unable to efficiently and effectively use the resources we spend to develop their job related skills, to encourage their development of identities as competent workers and to motivate them to reach for jobs with incomes that will lift them and their families out of poverty. The American Dream is not accessible to women in low-wage jobs – without essential supports of assistance in paying for the market costs of child care.

How to Stimulate Jobs for Working Mothers
Mark Greenberg, who is the Director of the Georgetown University Center on Poverty, Inequality and Public Policy, has proposed a child care strategy that would enable working parents who need to leave children in care to have access to care that enables the emotional and cognitive development of children. He would increase the income eligibility for child care assistance for working parents who need subsidies to maintain their participation in work above the present level of 185% of poverty. He would increase the share of child care assistance paid for by the federal government above their 57% share with states under the CCDF. And he would expand the amounts that can be deducted under the Child and Dependent Care Tax Credit to 50% of child care costs.

All of these proposals would contribute not only to the well-being of children – but also and equally importantly to the employment stability of working parents. Greenberg estimates that his child care subsidy proposal would cost an additional $18 billion a year above current federal expenditures on child care assistance ($11 billion). These reforms would increase access to child care assistance for 3 million working parents and their children. These costs represent less than 2.5% of $750 billion that we anticipate spending on an economic stimulus plan.

While we shape a major federal stimulus plan that promises to keep and create 3 million jobs – we need to make a commitment to keep jobs that are held by low-wage working mothers who are climbing a ladder out of poverty and dream of becoming financially responsible for the basic needs of their families. The National Women’s Law Center and the Center for Law and Social Policy (CLASP) have called for expanded investments in child care assistance to be a core part of the federal economic stimulus plan.

By investing 2.5% of the resources for a federal economic stimulus in child care assistance we would increase jobs within the national child care infrastructure – many of which would be filled by women workers. And we would enable women who are earning near poverty incomes to stay in work assured that their children are being well cared for and enabling them to dream of one day lifting themselves and their children out of poverty.

Links:
Para 2.
SEIU Survey/The American Dream: www.changetowin.org/features/the-american-dream-survey.html

Para 3.
Nancy Cauthen Statement/poverty level $18,000: www.nccp.org/publications/pdf/text_831.pdf

Para 4.
NCCP, Poverty Level $34,000 for family of 3: www.nccp.org/topics/lowwagework.html.

Para 6.
National Center for Children in Poverty: www.nccp.org
NCCP, annual income of $60,000/Family Resource Simulator/financial cliff: www.nccp.org/tools/frs.

Para. 16.
Mark Greenberg: proposed child care strategy. “Next Steps for Federal Child Care Policy”: www.futureofchildren.org

Para 18.
National Women’s Law Center: www.nwlc.org
Center for Law and Social Policy: http://childcareandearlyed.clasp.org/federal_developments

Stimulus Plan

House Adds $2 Billion to Cash for Clunkers

Awaking From the American Dream