Friday, May 08, 2009
In an effort to boost auto sales, and supposedly to help the environment, Congress is moving towards a plan to subsidize consumers who want to trade in their gas hogs for more fuel efficient vehicles. If the measure as currently crafted becomes law, owners of cars or light-duty trucks that get less than 18 miles per gallon (MPG) can trade in their “clunkers” and receive a voucher of $3,500 if the new vehicle gets a whopping four more miles a gallon. If the new vehicle gets 10 more MPGs, the buyer receives a $4,500 voucher. For instance, a consumer would be able to trade in a car that gets 10 MPG and be rewarded for buying a new auto that gets 14 MPG.
The plan would apply whether the purchased vehicle is domestic or foreign, and lawmakers intend for the rebate to be available for one year. A maximum of one million vouchers would be given out, totaling $3.5 billion to $4.5 billion in cost. According to CNW Research, an automotive research firm in Oregon, as many as 1.3 million consumers might take advantage of the “clunker voucher program.”
Democrats intend to roll the voucher plan into a larger energy bill, which could endanger its passage if more controversial plans to help curb global warming bog down. In addition, the proposal has drawn criticism from some who say that many Americans who drive clunkers would not be able to afford a new car even with the voucher, and that the “Cash for Clunkers” program is most likely to help those with higher incomes.
-Noel Brinkerhoff
Congress Close on ‘Cash for Clunkers’ (by Ken Belson, New York Times)
Cash-for-Clunkers: Lower Your Expectations (by Keith Johnson, Wall Street Journal)
House Democrats Reach an Accord to Subsidize Vehicle Trade-Ins (by John M. Broder, New York Times)
Fight Cash for Clunkers (Automotive Aftermarket Industry Association)
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