House to Vote This Week on Weak ‘Cash for Clunkers’ Plan

The House is poised this week to take up the so-called "cash for clunkers" bill, which aims to boost the slumping U.S. auto market by giving out tax credits of $3,500 and up to anyone who trades in a gas-guzzling car for a more efficient model.

fein.jpgSen. Dianne Feinstein (D-CA) is backing a stronger version of "cash for clunkers". Photo: Out in Hollywood

The plan was originally touted as environmentally friendly, given that it would theoretically encourage the use of more fuel-efficient vehicles, but it has long since morphed into a thinly disguised gift to the auto industry. The "cash for clunkers" deal that the House will vote on, sponsored by Rep. Betty Sutton (D-OH), offers money to truck drivers who improve their ride’s fuel economy by as little as 1 mile per gallon.

The likely passage of Sutton’s bill this week could be bad news for a stronger "cash for clunkers" plan that’s being promoted by Sen. Dianne Feinstein (D-CA), who displayed welcome candor last month in calling the Sutton plan "the auto industry’s version" of "cash for clunkers" and "unacceptable" to American drivers.

Feinstein’s proposal would require drivers to achieve a 25 percent fuel-efficiency increase before receiving a tax credit for ditching their clunkers. But Michigan Sen. Debbie Stabenow (D) is pushing for a trade-in tax credit that’s very similar to Sutton’s — truck owners would only have to increase their fuel efficiency by 2 miles per gallon to be eligible.

The requirements for car trade-ins aren’t much better under the Stabenow and Sutton plans, with a mere 4 mpg increase in fuel economy triggering the $3,500 tax credit.

If Sutton’s plan wins House approval this week, Stabenow’s Senate counterpart could potentially get a leg up over Feinstein’s.

Meanwhile, the larger question of whether the whole idea of "cash for clunkers" makes sense is getting much less attention than it should. The Obama administration continues to support Sutton’s effort, despite the fact that it would give drivers new incentive to buy trucks getting as little as 20 mpg. Doesn’t this risk undercutting the president’s plan to force trucks to reach an average of 30 mpg and cars to reach 39 mpg by 2016?

ALSO ON STREETSBLOG

House Quickly Sends $2 Billion More to ‘Cash for Clunkers’

|
The "cash for clunkers" rebate program, which promises new auto buyers up to $4,500 for fuel-efficiency upgrades as small as 2 miles per gallon, is back to life after burning through $1 billion in taxpayer cash. Minutes ago, the House approved $2 billion more in auto rebates by transferring cash that was already headed for […]

Separating Myth From Fact on “Cash for Clunkers”

|
As debate rages on in the capital over whether to keep assisting the auto industry by giving out more "cash for clunkers" rebates, two assertions are becoming commonplace: the program is helping diminish U.S. oil consumption, and the program is not paid for with new money. Photo: AP The first argument was reiterated on Friday […]
STREETSBLOG USA

GAO: Economic Recovery Benefits of ‘Cash for Clunkers’ Are ‘Uncertain’

|
"Cash for clunkers," the White House’s much-touted program encouraging trade-ins for more fuel-efficient autos, had an "uncertain" impact on economic recovery, according to a new audit from the independent Government Accountability Office (GAO) — largely because it remains unclear how many of the car sales it spurred would have occurred without taxpayer subsidies. Were "clunker" […]
STREETSBLOG USA

Report: “Cash for Clunkers” Was a Lemon

|
Here’s the thing about subsidies: They encourage people to do more of something than they would have under normal circumstances. That’s okay if the activity the government is subsidizing creates an overall benefit for society — like better educated kids, or a cleaner environment. But if said subsidy encourages behavior detrimental to society, well, that’s […]

Is “Cash for Clunkers” a Good Idea, Ever?

|
Photo: bondidwhat/Flickr The New York Times today endorsed a bill from Senator Chuck Schumer, and its companion in the House, co-sponsored by Long Island Democrat Steve Israel, which would offer up to $4,000 in vouchers to drivers who give up their gas guzzlers (averaging 18 miles-per-gallon or worse) in exchange for "a new or used […]