Senate Passes Cash-For-Clunkers Bill, President Likely to Sign
By Brendan Moore
The United States Senate passed the long-awaited Cash-For-Clunkers bill yesterday, sending it to President Barack Obama, who will probably sign it immediately. President Obama has fought hard to get the bill passed in Congress.
Champions of the bill are hoping it will spur auto sales, with the side benefit of reducing vehicle emissions. The auto industry is focusing on the stimulus to sales, and environmental groups are interested in the reduction of vehicle emissions.
Carl Levin, the Deomocratic senator from Michigan, and a staunch supporter of the domestic auto industry, stated, “This program will provide a much-needed boost to the struggling auto industry, including manufacturers, dealers, suppliers and other related industries.”
It also will “encourage consumers to purchase more fuel-efficient vehicles,” he said.
The program would kick off 30 days after the president signs it, and is limited to a total expenditure of $1 billion USD and expires October 1, no matter what else happens.
The bill that passed the Senate has stricter terms and less money allocated to the program than the original bill put forth two months ago. It was attached to a war spending bill for strategic reasons by the bill’s supporters.
The bill provides cash vouchers of up to $4500 USD for car buyers that trade in vehicles defined as gas-guzzlers. The eligible trade-in vehicles are:
Passenger cars as old as 1984 model year with combined mpg ratings of 18 or less are eligible. Owners get a $3,500 voucher if they buy for a new car that is rated by the federal government at least 4 mpg higher, or, $4,500 if they buy a car that achieves at least 10 mpg more.
SUVs, pickups or minivans as old as 1984 model year that get 18 mpg or less could redeem a voucher for $3,500 if their new SUV, truck or minivan gets at least 2 mpg more than their old vehicle or $4,500 if the new truck or SUV gets at least 5 mpg more. No word yet on what happens when someone trades an old pickup truck for a new car, but since the light truck is a passenger vehicle, it is assumed the passenger car terms of the program kick in.
Owners who wish to trade in such a vehicle must have owned it for at least a year, and it has to be road-worthy. Dealers are then accountable for making sure the trade-in gets taken off the road and junked.
Estimates of additional sales resulting from the program vary. Congressional Budget Office data suggest the bill would result in the sale of 150,000 new cars, according to Nichole Francis Reynolds, chief of staff to Rep. Betty Sutton, D-Ohio. In the interests of disclosure, it should be noted that Sutton sponsored the original bill. Edmunds.com, however, believes the bill will result in around 250,000 new vehicles sold that wouldn’t have been sold otherwise.
Critics say that even the higher number of 250,000 sales (and, at government expense) will make no difference in an industry that needs around five million more sales annually than it currently has in order to be healthy.
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