RVs, Riches & Reality: Elkhart, Indiana And The Stimulus

The President chose to make his first town hall meeting to stump for his economic stimulus package in Elkhart, Indiana. Elkhart considers itself the “RV (recreational vehicle) capital of America.” Sadly for the cheering folks behind the President in the press conference, his stimulus plan may ultimately do them more harm than good.

The President chose Elkhart likely because his advisors thought it a timely fit in today’s economy. According to the Wall Street Journal, Elkhart has shed 8,000 jobs. Its unemployment rate has soared to 15.3% from 4.7% in December 2007. RV companies are hurting, shipping just 5,600 vehicles in December, down 75% from 2007 levels.

Introducing the President at the rally was local Ed Neufeldt. Mr. Neufeldt was laid off when his employer, Monaco Coach, closed three of its RV factories. A centerpiece of Obama’s plan is to give many Americans a tax cut, generally between $500-$1,500 per year. Those cuts are said to go to 95% of American taxpayers. The problem for much of Elkhart, Monaco Coach and Mr. Neufeldt is that they likely make most of their bread and butter off the 5% that Obama wants to tax heavily.

Monaco makes 14 lines of RVs. Its high-end “Signature” series are some of the best vehicles on the market and start selling at $628,000. Rarified air for the very rich. Its cheapest model, the “Montclair Sport,” begins at $51,000. The mid-level vehicle (8th cheapest) starts at $163,000. Assuming a buyer has $23,000 to put down, he will finance the remaining $140,000 purchase price. At 6% APR, a 5 year loan on that RV will run the buyer about $2,700 per month. Even the lowest end vehicle using $40,000 borrowed money over 5 years at 6% comes to nearly $800 per month, or nearly $10,000 per year. And that doesn’t include fuel for the 15-20mpg vehicles, insurance, taxes or road and toll fees.

Menatime, the New York Times this weekend detailed the other side of what’s likely coming: the tax hike on the wealthy. The paper noted that taxpayers making $500,000-$1 million per year will see an average tax increase of $19,700 per year. Those making more than $1 million are really going to get hit, paying an average of more than $175,000 per year in extra taxes.

It’s hard to see how saving $1,500 per year will entice a buyer to pick up an RV. Its easier to understand how the likely coming tax increases could quickly turn a potential buyer off one. Whatever your views of taxes and the well-to-do may be, it seems pretty clear which side of that argument Monaco Coach and the good folks of Elkhart, Indiana should be on, even without the Presidential pomp and circumstance coming to their town.

by Brian Sullivan for FOX BUSINESS