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Cash-For-Clunkers Causes Confusion, Cantankery

Cash-For-Clunkers Causes Confusion, Cantankery

By Richard Read's avatar Richard ReadRichard Read May 20th, 2009

U.S. Capitol

U.S. Capitol

Enlarge Photo

Recently, we mentioned that the cash-for-clunkers legislation everyone's been giddy about would soon become a reality--and we had every reason to believe it. At the time, the measure was included as part of a larger, more divisive package on energy reform, but legislators in both the House and the Senate seemed determined to extricate it and run it through as an independent bill. Problem solved, right?

Wrong. Yesterday came news that cash-for-clunkers has been included in the bigass, fairly contentious American Clean Energy and Security Act--which is exactly what House Majority Leader Steny Hoyer (D-MD) and Senate Majority Leader Harry Reid (D-NV) were hoping to avoid. However, Reid did say that pulling out the bill would be tricky in terms of protocol, so maybe they haven't found the right loophole yet.

On the upside, now that cash-for-clunkers has emerged from committee (or wherever it was hidden) and been made official, we know a few more details. If the legislation were to pass as is...

  • Car buyers could get a $3,500 cash voucher by trading in any vehicle earning less than 19mpgs and purchasing one that gets at least 22mpgs. If the new car gets 10+mpg better than the old one, the buyer's voucher would earn $4,500.
  • Buyers of light trucks and SUVs would get a similar deal, but the low-end for new vehicles is set at 18mpgs. Same thing for fans of larger trucks and vans, but their new rides would have to earn 15mpgs or more.
  • Anyone with a work truck from before 2002 could trade for a similar or smaller vehicle in exchange for a $3,500 voucher.

As excited as many people are about all this (e.g. the dwindling membership of the National Automobile Dealers Association), cash-for-clunkers has its detractors (e.g. the folks who depend on recycled parts like the United Recyclers Group). And of course, it's inspired some friendly debate at TCC--most recently here. If you'd like to weigh in, feel free to drop us an email or post a comment below.

[source: Freep]

U.S. CapitolEnlarge Photo Recently, we mentioned that the cash-for-clunkers legislation everyone's been giddy about would soon become a reality--and we had every reason to believe it. At the time, the measure was included as part of a larger, more divisive package on energy reform, but legislators in both the House and the Senate seemed determined to extricate it and run it through as an independent bill. Problem solved, right? Wrong. Yesterday came news that cash-for-clunkers has been included in the bigass, fairly contentious American Clean Energy and Security Act--which is exactly what House Majority Leader Steny Hoyer (D-MD) and Senate Majority Leader Harry Reid (D-NV) were hoping to avoid. However, Reid did say that pulling out the bill would be tricky in terms of protocol, so maybe they haven't found the right loophole yet. On the upside, now that cash-for-clunkers has emerged from committee (or wherever it was hidden) and been made official, we know a few more details. If the legislation were to pass as is... Car buyers could get a $3,500 cash voucher by trading in any vehicle earning less than 19mpgs and purchasing one that gets at least 22mpgs. If the new car gets 10+mpg better than the old one, the buyer's voucher would earn $4,500. Buyers of light trucks and SUVs would get a similar deal, but the low-end for new vehicles is set at 18mpgs. Same thing for fans of larger trucks and vans, but their new rides would have to earn 15mpgs or more. Anyone with a work truck from before 2002 could trade for a similar or smaller vehicle in exchange for a $3,500 voucher. As excited as many people are about all this (e.g. the dwindling membership of the National Automobile Dealers Association), cash-for-clunkers has its detractors (e.g. the folks who depend on recycled parts like the United Recyclers Group). And of course, it's inspired some friendly debate at TCC--most recently here. If you'd like to weigh in, feel free to drop us an email or post a comment below. [source: Freep]

Tags: Economic, laws, Big Three, bailout



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Responses (17 total)

  1. 1
  2. 2

  1. By Stan #1, Posted: 5/20/2009

    Loopholes

    There are some loopholes (surprise!) in this legislation. The program will run for a year (or less if the money runs out); but you only have to own your clunker for 120 days. So, what's to keep you from buying the cheapest clunker you can find, letting it sit in your driveway for 4 months and then making a few thousand dollars off of Uncle Sam? Or, are you telling me I should have kept my grandfather's robin-egg-blue Grand Marquis???

  2. By Richard #2, Posted: 5/20/2009

    Please sir, may I have another

    You could, in theory, do that. But you'd still have to live with said clunker for four months--not to mention dealing with taxes and titles and licenses and the dealers themselves. If you're the sort of person who's up for that, you've got waaaaay more intestinal fortitude than many of us.
    _
    Also: you'd have no control over the trade-in value. It's not as if you could return the clunker in question and get your full buying price back plus $3,500. You'd have to factor in depreciation and financing (if you go that route) and all the other costs above. In the best of all possible worlds, you'd probably end up with closer to $1,000 or $1,500 max, and frankly, we can think of better ways to make that kind of money in four months--some of them legal, even.

  3. By Andre #3, Posted: 5/20/2009

    The details

    I'd be interested to hear the details on this piece of legislation. I too have thought of buying a clunker in the hope of trading it in and qualifying for the voucher. Where did you find out that you have to own your clunker for 120 days? Is this true? Agreed, the hassle of doing so may discourage some, but getting $4,500 off the price of a new car may make it worth it for others.

  4. By Andre #4, Posted: 5/20/2009

    The details

    I'd be interested to hear the details on this piece of legislation. I too have thought of buying a clunker in the hope of trading it in and qualifying for the voucher. Where did you find out that you have to own your clunker for 120 days? Is this true? Agreed, the hassle of doing so may discourage some, but getting $4,500 off the price of a new car may make it worth it for others.

  5. By Marc #5, Posted: 5/20/2009

    Left Out

    Why are those of us who didn't buy the big gas guzzlers being left out? I'm driving a 12 year old Chevy that got 27 mpg's when it was new. I doubt that is any longer the case but I'll receive no incentive to trade in my old oil burning chevy for a Civic Hybrid. Once again, DC has rewarded the wrong people.

  6. By Marc #6, Posted: 5/20/2009

    Left Out

    Why are those of us who didn't buy the big gas guzzlers being left out? I'm driving a 12 year old Chevy that got 27 mpg's when it was new. I doubt that is any longer the case but I'll receive no incentive to trade in my old oil burning chevy for a Civic Hybrid. Once again, DC has rewarded the wrong people.

  7. By  CarProperty.com #7, Posted: 5/20/2009

    Another Government Program??

    I suggest that if you have a clunker to sell to people that want to make a profit through this buy and hold strategy, that you should advertise it as being for sale on http://www.CarProperty.com ... we are setting up a new sub-category under the Cars for Sale category called Cash-For-Clunkers

  8. By Richard #8, Posted: 5/20/2009

    FYI

    Unfortunately for those wanting the text of the cash-for-clunkers legislation, it doesn't seem to have been posted to the congressional site yet. It's an amendment to the American Clean Energy and Security Act, though, so when it's ready, it'l be here: http://thomas.loc.gov/cgi-bin/bdquery/z?d111:h.r.02454:
    _
    If you'd like to look at the bill as it used to stand--back when it was flying solo--that's over here: http://thomas.loc.gov/cgi-bin/bdquery/D?d111:6:./temp/~bd8urX::|/bss/|

  9. By Sandy Blalock #9, Posted: 5/20/2009

    President

    This legislation will hurt most lower income Americans who can not afford to purchase a new vehicle even with this funding behind it. The drivetrains(engines, trannies, axle assemblies) out of the vehicles turned in will have to be destroyed and not available for resale. The
    people who need these parts to repair their vehicles will find the cost of these parts priced out of their market range and eventually unavailable at all. This bill will only benefit middle to upper middle class(who can afford to buy a new car) yet all taxpayers will foot the bill ... is that what our founding fathers expected? I think not....call your legislators and tell them this bill does not treat all Americans alike and should not be passed. This is AMERICA where all of us are created equal and have equal rights under the US Constitution!

  10. By  Brian Pasch #10, Posted: 5/20/2009

    Clunkers Would Help Car Dealers

    The thousands of local communities that depend on car dealerships for jobs would surely benefit from a boost in new car sales.
    New cars sales are now outpaced by used car sales for most dealers. There is such a backlog of new fuel efficient cars and maybe this bill gets consumers back in the dealerships buying.
    Many friends who own car dealership are hurting badly and their local plight is not something they are in full control of.

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