What do we want a Cash for Clunkers bill to do -- improve fuel economy or protect U.S. jobs?
President Obama asked Congress yesterday to pass fleet modernization legislation that provides credit to consumers who turn in old cars and purchase cleaner, more fuel-efficient cars during his GM bankruptcy speech. It wasn’t the first such request, as readers will know.
This should be a relatively simple law-making task. Well, nothing is easy about our special interest-dominated legislative process.
Cash for Clunkers is caught between environmentally-oriented legislators, who want to concentrate on fuel efficiency, and domestic auto industry- friendly lawmakers, who see it as a sales boosting tool.
As we have covered in detail, House Democrats from the Committee on Energy and Commerce have already passed legislation authorizing the government to subsidize vehicle buyers who trade in old ones for new, but it is tied up in a much larger, more controversial energy and global warming bill that won’t move forward anytime soon. Democrats are saying that they might attach the Clunker bill to another bill to get it moving, but until the Senate acts, it’s stalled. The Senate is due to consider a Clunkers bill this week, and the greens (as in environment) are fighting the greens (as in dollars from jobs).
The compromise House bill provides billions of dollars in taxpayer-financed incentives to buyers who trade in older vehicles for new ones. Buyers would receive a coupon, worth $3500 or $4500, if the new vehicle is more fuel efficient than the one replaced. The House program could cost taxpayers as much as $4.5 billion during the one year it would run, if all of the one million authorized coupons are cashed in. The money would come from the economic stimulus plan already approved by Congress last winter. (more…)