House OKs clunkers plan
WASHINGTON – The House on Tuesday approved a “cash for clunkers” bill that aims to boost new auto sales by allowing consumers to turn in their gas-guzzling cars and trucks for vouchers worth up to $4,500 toward more fuel-efficient vehicles.
President Barack Obama has encouraged Congress to approve consumer incentives for new car purchases as part of the government’s work to restructure General Motors and Chrysler. The House approved the bill 298-119.
Supporters pushed for the measure to stimulate car sales and increase the fleet of fuel-efficient vehicles on the nation’s highways. The auto industry has sought the incentives after months of poor auto sales. In May, overall sales were 34 percent lower than a year ago.
“Stimulating sales is the only way to get the auto industry back on its feet,” said Rep. Donald Manzullo, R-Ill.
General Motors Corp. and Chrysler LLC have received billions of dollars in government aid and the entire auto industry has watched car sales plummet during the past year. In May, overall sales were 34 percent lower than a year ago.
The vehicle scrappage bill has been under negotiations for months as lawmakers try to find a solution that boosts car sales while providing some environmental benefits. Proponents have pointed to similar programs in Europe that have enhanced auto sales.
Opponents said the bill failed to include incentives for used vehicles and represented an artificial incentive for the industry.
“It’s defying the laws of economics and saying we can manufacture enough of a demand to keep the auto industry afloat,” said Rep. Jeff Flake, R-Ariz.
Separately, House and Senate appropriators were discussing providing $1 billion to a supplemental war funding bill for the “cash for clunkers” program, which aims to generate about 1 million new auto sales. Since the yearlong vehicle program is expected to cost $4 billion, lawmakers would attempt to find the additional money later this year.
The bill would direct dealers to ensure that the older vehicles are crushed or shredded to get the clunkers off the road. It was intended to help replace older vehicles – built in model year 1984 or later – and would not make financial sense for consumers owning an older car with a trade-in value greater than $3,500 or $4,500.
The U.S. industry is expected to generate about 9.5 million vehicle sales in 2009, compared to more than 13 million in 2008 and more than 16 million in 2007.
A group of senators led by California Democrat Dianne Feinstein were pushing an alternative version that would require consumers to trade up for more fuel-efficient cars and trucks to qualify.