David Leonhardt has a good piece on credits for fuel-efficient vehicles:
U.S. Hybrids Get More Miles Per Congress - New York Times: David Leonhardt: [H]ybrid cars have basically been a luxury item. If you owned one, you could feel good about using less gasoline and being a trendsetter, but you couldn't expect the fuel savings to make up for the thousands of extra dollars that the hybrid cost.... But in the last few months, something important has changed. Gas prices have settled in at close to $3 a gallon, which is enough to make a few hybrids almost worth it, if not quite. And since the start of the year, the federal government has been giving generous tax credits to hybrid buyers.... If you're deciding between a Prius and a regular Camry, the Prius, which gets a $3,150 credit, will start saving you money in just a few years.
The point of a tax policy like this -- the point of a lot of tax policy, in fact -- is to give people an incentive to change their behavior, and persuading Americans to use less oil certainly sounds like one of Washington's priorities these days. Yet, astoundingly, many of the tax credits are about to be taken away. So if you are thinking of buying a Prius or Camry Hybrid, do it soon, as in this month or maybe next.... [T]he hybrid tax credit... was never really intended to reduce oil imports from the Middle East or slow the effects of global warming. The credit was created to prop up Detroit while giving conservation a nod.
Last summer... it was clear that any tax credit would go overwhelmingly to buyers of Japanese cars. So members of Congress, with help from Detroit's lobbyists, came up with an ingenious solution. They created a cap, a maximum number of hybrids that any single manufacturer could sell -- 60,000 -- before a clock started ticking, causing the credits for that carmaker to begin disappearing two quarters later. The idea, Mark Kemmer, a G.M. lobbyist, told Automotive News, was to keep any one company from getting "a runaway benefit."
Toyota hit the 60,000 mark last month, less than five months after the Jan. 1 start of the program, and the credits for its hybrid buyers will be cut in half on Oct. 1.... Honda... will probably hit the cap next year. And the Big Three? Combined, they have sold fewer than 15,000 eligible vehicles so far, all by Ford.... Come next year, then, the government will pay you to buy a Silverado hybrid (which gets about 16 miles per gallon) or a Ford Escape Hybrid (which gets about 26, according to Consumer Reports), but not a Prius (44)....
But I think there is a larger lesson here.... What the government can do that nobody else can, however, is set up a simple system of rewards and penalties -- with the single goal of reducing oil use, regardless of the means -- and then let the marketplace work it out. Economists tend to prefer a gas tax, but it's not the only option.... Google has a nice template: it gives $5,000 to employees who buy a car that gets at least 45 m.p.g. in the government's ratings, a threshold that only the Prius and two Honda hybrids now meet.
I know this might sound like one more nail in Detroit's coffin, but it doesn't have to be one. The Big Three have the engineering expertise to build vehicles that can go a long way on a gallon of gas. If Washington would only nudge people to buy cars like that, Detroit would start making them.
The implications with respect to the congressional leadership are obvious: vote them out of office; vote them out of office as soon as possible.