Two Clunker Bills: Cash for Car Trash?

(MoneyWatch)  There are telling differences between two proposed bills that would reward consumers for turning in their clunker cars. One is clearly designed to stimulate sales for the domestic automakers; the other is aimed at putting fuel-efficient cars on the road. Guess which one the environmentalists like?

The legislation proposed by Senators Dianne Feinstein (D-CA) and Charles Schumer (D-NY) has green credibility because the clunkers have to average 18-mpg or worse. And the $2,500 to $4,500 vouchers attached to the bill can only be applied to cars that exceed existing fuel-economy standards by 25 percent. It doesn't matter where they're made.

The Detroit-favored bill, proposed by Representative Betty Sutton (D-OH) requires only that the trade-in be eight years old and the new car get 27 mpg (24 if it's a truck) on the highway. Sutton's bill awards larger vouchers for American-made vehicles. All this means someone could walk in with a perfectly good 2001 Honda Civic, turn it in as a "clunker" and get a $5,000 voucher to use on, say, a new Chevy Malibu (33 mpg with the four-cylinder engine). An '01 Civic gets 35 highway mpg, so greenhouse emissions are actually slightly worse (but local smog might benefit some).

U.S. auto sales are down 40 percent so far this year, so it's not surprising that the Big Three and the United Auto Workers are championing Sutton's bill. There's no question that it would stimulate auto sales, because as Business Week reported, it would enable consumers to buy an $18,466 Ford Focus for just $10,000.

Ohio isn't Detroit, but it does have a lot of auto plants. Rep. Sutton is motivated. Alabama has auto plants, but not American-owned ones, so it's not surprising that Senator Richard Shelby (R-AL) described the auto bailout as "unnecessary and economically harmful" as well as a "gross misuse of American taxpayers' hard-earned money."

Flickr photo/tbrpix