Got an old V-8-powered clunker lying around? The government says it could be worth $4,500 towards the purchase of your next SUV — and it’s OK if it only gets marginally better gas mileage. I love the idea of the federal cash-for-clunkers law, but I hate the way it is shaping up in Washington, the city where dreams go to die.
But the compromise worked out between the House of Representatives has resulted in a bill that doesn’t make much sense, especially when it comes to trucks. The clunker has to get 18 mpg or worse, but the trade-in can be only two mpg better and you still get a $3,500 voucher. For $4,500, it only has to be five mpg better. This is not a misprint — two and five mpg — we’re not saving the planet with tiny increments this way.
The bill is a bit better for cars — it has to be 10 mpg better for you to clear the $4,500 voucher, but even if there’s only a four mpg improvement you’re good for $3,500. Thanks, Captain Planets of the U.S. House of Representatives!
The American Council for an Energy-Efficient Economy says the scrappage program “needs repair.” According to Therese Langer, ACEEE’s transportation program director, “I can’t see using taxpayer dollars to sell a Hummer H3T [which meets the 15-mpg large truck threshold].”
There’s a better bill, introduced in the Senate by Dianne Feinstein (D-CA), Susan Collins (R-ME) and Charles Schumer (D-NY).
This one would achieve 32 to 38 percent greater fuel savings than the House compromise, and would demand that the car you buy has above-average fuel economy in its class. The trade-in will have to be 17-mpg or worse, which may raise the price on ’74 Cadillac Eldorados. New cars under their version of the program will have to get at least 24 mpg and trucks 20 mpg. The new car will have to be at least seven mpg better than the one traded in, and the new truck at least three mpg.
The senators think their version would save 176 gallons of gas per vehicle per year (compared to 133 gallons in the House bill) and 11,451 barrels of oil per day (House: 8,706 barrels). Feinstein says the House compromise would “allow for the scrapping of perfectly adequate vehicles in return for federal incentives to purchase gas-guzzling vehicles. That’s unacceptable.”
It’s not surprising that the Alliance of Automobile Manufacturers likes the Senate version of the bill backed by Deborah Stabenow (D-MI) and Sam Brownback (R-KA). It’s much friendlier to SUVs and other cars Detroit is still stuck with. New cars have to get 22 mpg instead of 24, and trucks 18 mpg instead of 20. Brownback and Stabenow say it will sell a million vehicles over its one-year life. That’s great for Stabenow’s state of Michigan, but what kind of cars will they be?
According to Alliance President and CEO Dave McCurdy, “With just-released May auto sales reporting a continued decline towards numbers that haven’t been seen in a quarter century it is imperative to consumers, dealers, manufacturers and the communities they represent that a fleet modernization proposal be passed by Congress and quickly signed into law by the President.” That's their emphasis.
Jack Hidary, one of the authors of the Center for American Progress white paper and the chairman of Smarttransportation.org, says the compromise bill came about because lawmakers needed the vote of powerful Michigan Congressman John Dingell on the climate bill, and "he demanded a much lower bar because U.S. automakers produce so few fuel-efficient cars."
U.S. automakers currently have a million cars in inventory, so action is needed fast. Ten other countries, including Germany and Italy, have instituted their own version of clunker bills, and they're already producing increased car sales.
Let’s get rid of the clunker of a bill now moving forward. The reform bill would actually help, compared to legislation that is a big wet kiss to auto states and car dealers. It is still early in the process, Hidary says, and it is possible that the legislation that actually gets passed will be a further compromise — between the Stabenow and Feinstein versions of the Senate bills. The differences could be worked out in a Senate conference.
Here's a bit more of an explanation of how cash for clunker bills work, from Cars.com: