‘Cash for Clunkers’ Finds its Congressional Sponsors
How’s this for a stimulus plan? A trio of senators introduced legislation today allowing owners of gas-guzzlers to trade their vehicles in for thousands of
Jul 31, 202014.1K Shares1M Views
How’s this for a stimulus plan?
A trio of senators introduced legislation today allowing owners of gas-guzzlers to trade their vehicles in for thousands of dollars in credit on a more fuel-efficient car.
The temporary “cash for clunkers” program would work like this: Owners of vehicles that get less than 18 miles-per-gallon would be able to turn in those cars for $2,500 to $4,500 in credit toward the purchase of a more efficient model. The gas guzzler would be scrapped, getting it off the road forever.
Sponsors of the bill — Sens. Dianne Feinstein (D-Calif.), Susan Collins (R-Maine) and Charles Schumer (D-N.Y.) — say the four-year program would retire up to one million gas guzzlers in the fourth year while saving up to 80,000 barrels of fuel per day. From Collins’ statement:
“„Taking these cars and trucks off our roads and highways would help reduce our dependence on foreign oil, decrease greenhouse gas emissions, and stimulate the economy. In addition, it would help boost demand for manufacturers of newer, efficient models and bring in new business for car dealers who are struggling in the current economy.
In the House, the same bill was introduced today by Reps. Steve Israel (D-N.Y.), Jay Inslee (D-Wash.), Barbara Lee (D-Calif.) and Dennis Moore (D-Kansas).
The lawmakers aren’t the only ones pushing cash for clunkers as part of the Democrats’ yet-to-be-released economic stimulus proposal. Writing in the Detroit Free Pressearlier this month, Brookings Institution economist Jason Bordoff laid out both the economic and environmental advantages of such a program:
“„Cash for clunkers can provide timely economic stimulus by giving people money quickly to spend on cars. Each stimulus dollar would also have high bang-for-the-buck because it would be directed toward the purchase of a newer car, and thus less likely to be saved, used to pay down debt or applied in other ways that do not boost consumer spending. Since low-income people are more likely to own older cars, the program is also targeted at those most in need.
“„With new car sales plunging, the stimulated demand for new cars would pep the auto industry and assembly lines. Even the purchase of a used car would indirectly boost new cars sales because the scrapping of each old vehicle from the U.S. fleet paves the way for more.
“„Cash for clunkers would also reduce carbon emissions, local pollution and oil consumption. Older cars emit far more local pollution. A California study, for example, found that in 2010, vehicles from model year 1998 or earlier will be responsible for 25 percent of miles driven but 75 percent of local pollution.
Sounds like a way to kill a few birds with one stone. But while the proposed program may be worthwhile for someone driving a 20-year-old gas-guzzler, how do you entice the driver of that $50,000 Escalade to scrap it for $4,500?
Camilo Wood
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Camilo Wood has over two decades of experience as a writer and journalist, specializing in finance and economics. With a degree in Economics and a background in financial research and analysis, Camilo brings a wealth of knowledge and expertise to his writing.
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