Those concerned the government shouldn’t be in the automobile business may have fresh material from the “cash for clunkers” bill before Congress.
On Wednesday, the Senate co-sponsors of the bill — Sens. Susan Collins of Maine, Dianne Feinstein of California and Chuck Schumer of New York — introduced its latest version, which creates vouchers for consumers to junk their gas-guzzling “clunkers” for newer, more efficient vehicles.
The legislation is branded as economic stimulus and environmental protection. There are 27 million vehicles on U.S. roads that qualify as clunkers (averaging less than 17 miles per gallon); replacing them with more efficient models would save about 11,451 gallons of fuel a day, the senators said.
But the legislation makes one basic assumption: The owners of old, cheap cars will be enticed to buy new, expensive ones with vouchers of between $2,500 and $4,500, depending on fuel mileage improvement.
It’s possible that owners of dead clunkers will re-animate their beasts for one last trip to the crusher, and use a voucher to purchase new cars to drive, which would increase fuel usage, not reduce it.
A more concering issue is this: The drivers of old, inefficient, gas-guzzling clunkers are arguably also the least likely, or least able, to purchase new cars.
Prompting people of perhaps limited means to leap into new cars is poor policy. Now, more than ever, it is time to encourage sensible purchasing and indebtedness, as the irrational exuberance of the credit-charged economy is still biting us. Yet the cash-for-clunkers bill dangles the most money — but still not enough — for the newest cars possible.
If the goal is fuel efficiency, wouldn’t any improvement over a clunker be laudable? Cash-for-clunkers offers vouchers primarily for new cars, with only smallish amounts for purchasing used vehicles, down to model year 2004. Wouldn’t clunker owners be more encouraged, and better off, to replace them with affordable alternatives, such as used vehicles?
This bill does have potential to save fuel, and sell cars. But the conclusions are based on one thin premise: that the drivers of clunkers are willing, and in many cases able, to scrap them and walk out of showrooms jingling the keys of a brand-new car. There should be questions about whether vouchers can do this, and if so, whether they should, given the debt incurred in new vehicle purchases.
Two factors have been at work in creating this bill. One, as pushed by Sen. Collins, was to improve American fuel economy. The other, pushed in the House, was to improve the automotive industry economy. America does need both.
But it’s too much to ask from one piece of legislation. And, probably, it’s too much to ask from “cash for clunkers.”
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