Congress aims to jump-start cash for clunkers program

McClatchy NewspapersMay 13, 2009 

Old cars may be turned in for the "cash for clunkers" program.

CAROLINE CHEN — Caroline Chen/Philadelphia Inquirer

WASHINGTON — Consumers could get up to $4,500 each to help replace old gas-guzzling cars — as long as they turn in their old ones — under a plan that's gained strong support from the White House and leaders of Congress.

The "cash for clunkers" movement has proved so strong that Senate Majority Leader Harry Reid, D-Nev., is seriously considering making it part of the emergency Iraq and Afghanistan war-spending bill.

The House of Representatives is expected to vote on the war-funding measure by Friday, probably without the "cash for clunkers" language, which the Senate is expected to add next week when it debates the legislation.

" 'Cash for clunkers' is really important," Reid said.

President Barack Obama has added his voice to the chorus. After House Democrats described the plan at a White House meeting last week, "the president commended the members for moving forward a plan that will help the American auto industry and provide Americans with cleaner automobiles," White House Press Secretary Robert Gibbs said.

The plan that appears to have the most support would allow consumers to trade in older gas guzzlers and get vouchers worth up to $4,500 to help pay for more fuel-efficient cars and trucks.

Sen. Debbie Stabenow, D-Mich., and key House Democrats are pushing that plan. It would allow an old car _the term "old" isn't defined — that gets 18 miles per gallon or less to be swapped for a new car with mileage of at least 22 mpg. If the new car's mileage is 4 mpg better, the consumer's voucher would be worth $3,500. If the improvement is at least 10 mpg, the voucher would be worth $4,500.

For light duty trucks, old vehicles also must get less than 18 mpg. If the new truck or SUV gets 2 mpg more, the voucher would be worth $3,500, increasing to $4,500 if the mileage improved 5 mpg. Other incentives are provided for large light-duty trucks and work trucks.

Supporters estimate that the program, which would stay in effect for a year, would boost car and truck sales by 1 million.

"At the end of the day, this is basically an incentive, and we know from experience that providing a few thousand dollars is an effective way of increasing sales," said Bernard Swiecki, the director of market analysis at the Center for Automotive Research in Ann Arbor, Mich.

Such incentives tend to reduce future sales, but with current sales so low, "pulling sales forward" may not be bad, Swiecki said.

"We make the trough less deep," he said.

Not everyone is crazy about the idea, for a variety of reasons:

  • Cost. The price is estimated at $3 billion to $4 billion. Backers want Obama to use money from the economic stimulus, and if extra money is needed, it could come from the emergency war-spending bill.
  • Fuel efficiency. An influential group of lawmakers wants more emphasis on saving fuel; that could prove significant in shaping the final legislation.

"The concepts of the different approaches are the same, but some of us have different goals," said Sen. Dianne Feinstein, D-Calif. She criticized the House Democrats/Stabenow approach as too geared to helping the auto industry.

"Essentially what it means is that perfectly good vehicles would be scrapped," Feinstein said, "so that vehicles with below-average fuel economy could be purchased."

American taxpayers, she said, already have pledged billions to help the auto industry, "without any special considerations for achieving greater fuel economy. This is unacceptable."

Under her plan, vouchers up to $4,500 could be used to buy new or used cars that meet tougher fuel-efficiency standards than House Democrats and Stabenow propose.

Feinstein also would require that the replacement vehicles have manufacturers' suggested retail prices of less than $45,000, are from the model year 2004 or later and meet or exceed federal emissions standards.

  • Supplies of auto parts. Not only will ridding the roads of old cars increase the likelihood that parts will get harder to find, but independent repair shops would lose business and car aficionados could have more difficulty buying and revamping old vehicles.

The Specialty Equipment Market Association, which represents car enthusiasts, wants to require that scrapped vehicles be less than 25 years old and to allow the engine and drive train to be recycled if they've been disassembled.

Stuart Gosswein, the director of federal regulatory affairs at the association, conceded that political momentum for the plan is so strong that it probably can't be stopped.

"Lawmakers seem bound and determined to scrap old cars," he said.

ON THE WEB

House Democrats' information on "cash for clunkers"

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McClatchy Newspapers 2009

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