Otherwise known as the American Recovery and Reinvestment Act of 2009, this stimulus bill is worth $787 billion all in all. Presently, it gives up to $2500 tax credit for buyers of low-speed new electric vehicles. However, this has been criticized as a “pork barrel” for golf carts.

On the plus side, however, it allows new car buyers this year to deduct the local and state taxes paid on their vehicle purchases from their annual federal taxes. While $1.7 billion is allocated to fund this tax deduction, this move received a lukewarm reaction from consumers, probably because they won’t be seeing the figures realized until the end of 2009.

Once the next generation plug-in hybrids and fully electric vehicles are introduced into the market, consumers will be better able to see the benefits of this stimulus bill. Tax credits reaching up to $7500 are offered to buyers of 4-wheeled plug in vehicles with 4 to 16 kilowatt-hours of battery power loaded in them. At least 1 billion of the total funds are allocated for this particular tax deduction.

Also on a more positive note, the bill also expands the limit of the tax credit program from 250,000 hybrid cars all-in-all. The stimulus bill’s limit is now a total of 200,000 plug-ins and hybrids per manufacturer.

This proposal is tagged the Harkin-Stabenow amendment, and most US lawyers have reason to believe that it violates important aspects of the World Trade Organization rules, as well as the North American Free Trade Agreement.

Car manufacturing and dealing companies are fearful about the effects of this move on the US economy. With the new amendment, there’s a big possibility that car sales will drop drastically this year. The US happens to hold a big chunk of the world’s car manufacturing industry.

The other side of the coin

On the plus side, a lot of environmentalists and households are excited about the immediate effect of this amendment. Most people refuse to hand-over their 10-year-old faithful for newer, cleaner models simply because they can’t afford to pay for a new car.

With the $10,000 credit aid from the government, a lot of US households may see the possibility of owning new hybrid cars. The environmentalist dream of saving what’s left of the ozone layer can be made real.

Executioner’s Alley

The amendment states that households wishing to get the rebate should trade in cars that are over 10 years old. The car also needs to be functional, meaning you can’t trade in mere scrap metal. You have to trade in a car that you obviously still drive around the city. In exchange for the $10,000 rebate, your old car will be demolished to make sure that it won’t be used again.

The Senate allocated $16 billion for this project—just enough to make the rebate possible until September 2010.