"Cash for Clunkers" Gains Momentum in Congress

cash for clunkers congress photo

Photo via Search Auto Parts

Two new bills that would pay American consumers to get rid of their old gas guzzlers in exchange for new, more fuel efficient cars are picking up steam in Congress. The cash for clunkers bills have garnered wide bipartisan support and could reward new car buyers up to $5,000 for getting their pollutin' jalopies off the road. But would the plans work?
Maybe. Ideally, they would simultaneously help spike flagging US auto sales and decrease pollution. Automakers, unsurprisingly, are enthusiastic about the idea. They say the bill could boost sales by up to 3 million units a year. Germany and France have implemented such rebates, and it's spurred auto sales in both countries.

But the remaining hurdles are many:

Cash For Clunkers' Bumpy Road
For instance, what to do with a probably massive influx of old cars remains undetermined, and has some environmentalists worried. Also, the measure would be expensive—the program could cost up to $2 billion, and would have to squeeze it's funding out of the stimulus bill. And the vast majority of that funding has already been spoken for—only $3 billion or so may remain unallocated.

There's another tricky question inherent in the proceedings: would the incentives only apply if consumers buy American cars, or will the reward apply across the board?

If I'm an American consumer with an average working class salary, and I could turn in, say, a beat up old Ford Taurus in exchange for $5000 with the prospect of buying a new Honda Insight Hybrid for $19K, I very well might make the switch. Then, I'd be sparing emissions, but not necessarily boosting the American economy. If I could only exchange it for, oh, I don't know, almost any American car (exceptions aplenty of course), then my fuel efficiency savings wouldn't increase nearly as much, and I'd be creating an entire car's worth of waste, too. But I'd be helping keep those grand American innovators at GM and Chrysler afloat.

A Closer Look at Cash for Clunkers
One bill is sponsored by Sen. Feinstein, the other co-sponsored by 19 different lawmakers in the House.
Between the bills, the proposed standards would be as follows (via the LA Times)

The House bill offers graduated incentives to people who junk a car or truck at least 8 years old. They would get a cash voucher for $3,000 for buying a new truck that gets at least 24 miles per gallon and was assembled in North America. A new car that gets at least 30 mpg and was assembled in the United States would qualify for $5,000. The new car would have to cost less than $35,000.

Feinstein's bill requires that the used car being traded in get less than 18 mpg. Cash vouchers would range from $1,500 to $4,500, depending on the age of the trade-in and on whether the owner buys a new or used car. The new vehicle must cost less than $45,000 and must exceed federal mileage standards by at least 25%.

Feinstein's bill seems reasonable—but $3,000 for buying a new truck that gets a lousy 24 mpg seems ridiculous in the House version. Though federal mileage standard right now is only 25 mpg, so consumers would only have to buy a car that gets better mileage than 30 mpg, it's still a huge improvement from any car that gets 18 mpg. Whether this plan works will depend on the rigidity of the rebate standards, and whether or not a plan for effectively reusing and dealing with the scrapped autos' parts gets included.

More on Cash for Clunkers
Get Cash For Your Clunker?
Is Buying Up the Country's Clunkers Smart, Eco-Friendly Policy?

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