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politics

Obama Okays Purchase of 17,600 American Cars

Adam Kirchner

Posted: Apr 11th 2009 3:31PM

Filed under: Politics, Breaking News, The Economy, Towson University

The Obama Administration pledged to buy thousands of cars from American automakers that have been practically insolvent for months, in a press release dated April 9.

"The General Services Administration will spend $285 million of Recovery Act Funds to purchase about 17,600 commercially available fuel efficient vehicles for the government fleet before June 1, 2009," the press release states. "All purchases will be made from manufacturers with an existing contract with the GSA, which are General Motors, Chrysler and Ford. This includes the purchase of 2,500 hybrid sedans that will be ordered by April 15. This is the largest one-time purchase of hybrid vehicles for the federal government fleet in history."

Chrysler and GM had already been collectively granted $17.4 billion worth of Troubled Asset Relief Program loans in December, with the obligation to present the Obama Administration with restructuring plans to avoid bankruptcy by March 31. Having missed the deadline, they were granted another 30 and 60 days, respectively.

In other automaker bailout news, "the IRS is launching a campaign to alert consumers of a new tax benefit for auto purchases made between February 16th and the end of this year: if you buy a car, you may be able to deduct the cost of any sales and excise taxes," president Obama said in his remarks on March 30 regarding the failure of Chrysler and GM to restructure before the deadline. "This provision could save families hundreds of dollars and lead to as many as 100,000 new car sales," he added.

What part of spending $17.4 billion and then another $285 million in public funds saves taxpaying families hundreds of dollars? Or is "saving" a euphemism for relatively less rampant government spending?

And is that 100,000 new car sales plus the 17,600 purchased by the government, or is that actually just 80,000 new car sales plus the 17,600 purchased by the government to total "as many as 100,000 new car sales"? Because that sounds like the administration will be responsible for about 20% of what it suggests the private sector will do.