The U.S. House of Representatives approved a fleet modernization bill, known as Cash for Clunkers, June 9 in a 298-119 vote. It is intended to stimulate vehicle sales by providing cash vouchers to buyers who trade in their older, gas-guzzling vehicles for newer, more fuel-efficient models.
The legislation, which still must be passed by the Senate, faces challenges such as where to find money to pay for the one-year, $4-billion program. Some lawmakers said the $787-billion economic stimulus package passed earlier this year could provide funds, but the Senate Appropriations Committee has balked at that proposal.
The legislation aims to reverse a dramatic drop in U.S. auto sales. Proponents said a similar program in Germany has spurred a double-digit increase in car purchases there. They also say the bill is good for the economy, environment and consumers. Opponents criticize the bill as another handout to the auto industry and that the government can’t manufacture enough demand to save the auto industry.
The House bill, authored by Rep. Betty Sutton, D-Ohio, would authorize the administration to provide cash vouchers up to $4,500 to consumers who trade in older vehicles and lease or purchase a newer, more energy-efficient one. It would require the older vehicle to have a fuel economy of 18 miles per gallon or less and the newer vehicle to get at least 22 mpg. The voucher would be worth $3,500 if the newer vehicle achieved a four-mpg increase in fuel economy. If the mileage of the new car was at least 10 mpg higher than the older vehicle, the voucher would be worth $4,500.
The bill now moves to the Senate, where two different versions have been introduced.
California Democrat Dianne Feinstein is promoting one alternative proposal that requires tougher mileage limits on the trade-in program. Feinstein’s bill requires that the older vehicle must get 17 mpg or less, and that new passenger cars must achieve at least 24 mpg to be eligible for vouchers. To get the maximum $4,500 voucher, the new vehicle must achieve a minimum 13 mpg more than the old one.
