‘Cash for clunkers’ is clunker of a bill
The Senate appears poised to pass the so-called “cash-for-clunkers” legislation that is supposed to help get fuel-guzzling vehicles off the road. But it is really more of an additional bailout for domestic auto companies.
Here’s how it works: If you are lucky enough to have a “clunker” to trade in, and can afford to purchase a new, more fuel-efficient vehicle, you could receive a federal voucher worth up to $4,500 toward the purchase of that new car.
If you don’t have a clunker ready to trade, or you can’t afford a new car even with the federal voucher, then you get to watch as your tax money goes to help someone else buy a new, more fuel-efficient car.
Imagine the satisfaction you’ll feel.
The cash-for-clunker bill has also been called a “fleet modernization” bill and touted as a “fair trade for the environment.” But the ecological benefits may be much less than they seem, which is why some environmental groups are expected to challenge the bill.
It could have substantial impact if everyone who takes advantage of the vouchers acquires a new vehicle that gets at least 10 miles per gallon better fuel mileage than the car they are trading in — which must be scrapped. The 10 mpg boost in fuel efficiency is required to obtain a $4,500 voucher for anyone purchasing a new car. The buyer’s existing car must also have been registered for at least a year and have a mileage rating of 18 mpg or less.
But car buyers can also trade in for a vehicle that gets 5 mpg better mileage than their existing cars. In that case, they would be eligible for a $3,500 voucher.
When it comes to SUVs and trucks, however, all you need to do is boost your mileage by 2 mpg or more to receive a voucher worth $3,500 ($4,500 for 5 mpg). In other words, trade in that light pickup that gets 17 mpg for a new one rated at 19 mpg, and Uncle Sam will kick in $3,500.
That’s not much of a reduction in your carbon footprint, but the real point is to help American auto manufacturers reduce their large inventories of vehicles, including trucks and SUVs.
If the mileage boost needed to receive a voucher were set too high, owners of American-made clunkers might trade for vehicles made by companies with headquarters in Germany, Japan or Korea. Now that the U.S. government is a major owner in both General Motors and Chrysler, it doesn’t want that.
The cash-for-clunkers bill has been a stand-alone bill in the House. It was introduced early this year, but has stalled. This week, however, the measure was introduced in the Senate — as an amendment to a bill concerning federal regulation of tobacco products. It appears to have bipartisan support and could pass quickly.
All three U.S. automakers this week announced sales figures for May that, while still down, indicate that the market for new vehicles is picking up. Given that fact and the billions of dollars that U.S. taxpayers have already given to bail out GM and Chrysler, Americans who can’t afford a new vehicle or don’t have a clunker to trade might reasonably ask why they should help subsidize the new-car purchases of their fellow citizens.