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I like the idea of making the rebate contingent on the price of the vehicle selling for MSRP or less, if you can afford to pay over sticker, then you don't need the rebate.

That said, I'm more concerned for the long term health of the $7500 rebate in general. It is an entitlement that is funded with debt at the moment, and our annual budget deficit is approaching 10% of GDP...that is not sustainable, and at that rate is won't be long before US gov't bonds are derated...increasing the interest the US pays to run a deficit (i.e., Ireland).

We have got to balance the budget, and if the gov't provides an entitlement, they have to find a way to fund it. I like the $7500 rebate, but I don't like the fact it is financed with debt. IMO, we need to make it premanent and fund it with at gas tax....as that would be good policy that together would incentivize consumers to move away from low MPG vehicles. If we as a nation can't find away to make it sustainable, then eventually it will be eliminated...probably sooner than later. If you really want to get radical, we could consider feebates as advocated by Amory Lovins in Winning the Oil End game...course that would never pass the House...but it does make for interest policy that pays for itself.
 

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The reality is that the national debt depends on four things. Three are on the spending side. In this order they are: (1) Medicare; (2) Defense Spending; (3) Social Security. Nothing else on the spending side matters. Worrying about a tax rebate for electric cars is pointless since it's not even a rounding error in the fifth decimal place. (If you really want to worry about tax expenditures look at the deduction for home mortgages, that at least will register on the budget). The fourth is on the revenue side. The Bush tax cuts turned the largest surpluses in US history into the largest deficits in US history in a few short years. Let them expire and presto, the budget is back in balance.
Blame Bush if it makes you feel better, but it doesn't solve the problem. I choose to blame both Democratics and Republicans. Congress controls spending and taxes, all the President can do is veto a spending or tax bill.

In 2010, total tax revenue was $2,381 Billion, while total expenditures was $3,552 Billion. We spent $1,171 Billion more than we took in. For the sake of argument, I’ll give you a 30% reduction in defense spending. In 2010, the US spent $663.7 Billion on defense, 30% equates to $199 Billion. After that reduction, you're still $972 Billion in red for 2010, almost a Trillion dollars.

http://en.wikipedia.org/wiki/2010_United_States_federal_budget

So let's repeal the Bush Tax cuts per your argument: In 1999, US GNP was $9,354 Billion, and Tax revenue was $1,825 Billion, or 19.51% of GNP. In 2010, US GDP was $14,508.2 Billion. If it was taxed at 19.51%, revenue would have been 2,830.5 Billion. That’s $449.5 Billion more than the actual tax revenue in 2010. Unfortunately, you're still $522.B in the red for 2010, nearly half a Trillion dollars. So where do you make up the rest?

Oh, by the way, in 2010 we only paid $164 Billion in interest on our 13.561 Trillion nation debt thanks to historic low interest rates on T-bills. In 1999, we paid $229 Billion in interest on our $5.656 Trillion National debt, or 4.05%. If we had paid the 1999 interest rate on our 13.561 Trillion debt, the interest payment alone in 2010 would have been $549.1 Billion, more than the $464.7 Billion (663.7 - 199) you think we should be paying for defense.

Congress and the nation are going to have to make some very hard choices in the very near future. Things like the $7500 rebate will be the first to go...if it's not revenue neutral.
 
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