'Cash for Clunkers' Amendment Could Save You $4,500

by Lynn B. Johnson on June 1, 2009

gas-guzzlerOn May 21, the House Energy and Commerce Committee formally adopted a White House / Congress compromise that includes a “Cash for Clunkers” amendment within the American Clean Energy and Security (ACES) Act. The amendment is designed to cut greenhouse-gas emissions while stimulating auto sales.

If ACES becomes law, the program will be authorized for up to one year and provide for approximately one million new car or truck purchases. ’Cash for Clunkers’ would offer vouchers worth $3,500-$4,500 to people who trade in old gas-guzzlers for new cars and trucks. Car buyers would receive a $3,500 cash voucher for trading in any vehicle that earns less than 19 mpg and purchasing one that gets at least 22 mpg. If the new car gets more than 10 mpg better than the old one, the cash voucher would rise to $4,500.

Light truck and SUV consumers would get a similar incentive, but the low-end for new vehicles is set at 18 mpg. If the mileage of the new truck or SUV is at least 2 mpg higher than the old truck, the voucher will be worth $3,500.  If the mileage of the new truck or SUV is at least 5 mpg higher than the old truck, the voucher will be worth $4,500.

U.S. Representative Bruce Braley (D-Iowa) said of the amendment, which passed 50-4-1, “The ‘Cash for Clunkers’ concept will help boost our economy, save families money, and decrease our dependence on foreign oil.  By including this compromise in the new energy bill, we can accomplish many goals at once: consumers will get a break to purchase more fuel-efficient vehicles; we will all benefit from a reduction of greenhouse gases; and we will save American jobs by jumpstarting the auto industry.”

Braley, a member of the the House Energy and Commerce Committee since earlier this year, welcomes comments about the ACES Act.

The program could cost taxpayers $4 billion. Similar legislation in Germany has allegedly boosted new-car sales by 40 percent. A similar bill was withdrawn from the U.S. Senate stimulus package in February.

What are your thoughts?

Discussion

Bill
But what about the person that donates a car and does not itemize their tax return thereby not getting the tax break. This would not be fair to them.
July 11 at 12:55 pm
karenc
60% of the cars donated to charity will now be eligible for a voucher under cash for clunkers. Since the tax deduction for donating a car is so much lower than the voucher, charities won't be able to compete. A better idea is to just increase the tax deduction for a car donation. This way all vehicles are eligible, the government doesn't have to spend $4 million on vouchers and administer a program with rules which are not enforceable!
http://www.cars4charities.org
June 23 at 15:47 pm
RolloverUSA.com
http://www.RolloverUSA.com for more info on cash for clunkers.
June 19 at 16:52 pm
RoJo
My two clunkers are a 93 Camry and 99 Forrester. The combined mileage respectively are 21 and 20. So because I bought responsible environmentally sound cars, I lose 4,500 on a new car that I need. And I am looking at a Prius.
June 18 at 19:13 pm
Glenn
I just traded in my truck that got 16 miles to the gallon and bought a car that gets 27 miles to the gallon three months ago. Do I not qualify even though I did it in 2009?
June 10 at 07:01 am
Odysseas Papadi
I do not think so because the legislation has not gone thru, but with the rising gas prices I am sure you are enjoying the everyday savings :)
June 11 at 09:59 am
Lynn B. Johnson
Karen, the program is only for a year, and only for newer clunkers.
June 6 at 09:22 am
karenc
This bill would put every charity car donation program in the nation out of business since the amount of the voucher would be much greater than the tax deduction. The solution is to simply allow the charity to issue the voucher in lieu of the tax deduction. The charity would then junk the car in accordance with the bill. This way, everyone wins, the car dealer, car maker, car buyer and the charity.
June 5 at 20:01 pm
karenc
This bill would put every charity car donation program in the nation out of business since the amount of the voucher would be much greater than the tax deduction. The solution is to simply allow the charity to issue the voucher in lieu of the tax deduction. The charity would then junk the car in accordance with the bill. This way, everyone wins, the car dealer, car maker, car buyer and the charity.
June 5 at 19:55 pm
Lynn B. Johnson
Thanks for your comments, folks.

Oguz, the Senate bill, S1135, provides vouchers only for buying or leasing new vehicles. HR1550 also specifies "new" vehicles.

Tim, this bill has less to do with reduced foreign-oil consumption, and more to do with stimulating the auto industry.

The SF Chronicle has an article about the House and Senate bills here: http://tinyurl.com/rcx54s
June 4 at 13:05 pm
Tim
I still don't get it. The federal government collects a tax on every gallon of gasoline. The taxpayers are being 'convinced' to lower our gas consumption. This will then lower the amount of tax dollars collected by the government. Will the government then reduce the federal budget? I don't think so. We're all told that we need to reduce our consumption of foreign oil. So why not increase domestic oil production/exploration?
June 3 at 23:27 pm
scott
I'm with Jim, what happens to the guy at the parts counter the remanufacturing plant, and not to mention still going to have a car payment.
June 2 at 21:43 pm
Oguz
How new has the car to be??? I mean it says "new" but how new?? 1 year old or could it be 2-3 years old and is there any restrictions on mileage... Cause I am getting excited about it but if I can buy a car 2 years old and shave off some extra $$$ than we got an awesome deal here.
Thanx guys
June 2 at 20:00 pm
alan
I am for this idea. Car manufactures should not get any more money, because it is thier own fault for making cars too expensive for the normal working american.
June 2 at 19:54 pm
Phil
I'm waiting patiently to get rid of my van that gets 17 MPG. I couldn't sell it for $2000 with the 173K miles on it. I'm with Dave on this hoping it passes quickly.
June 2 at 12:18 pm
glen
The legislation currently proposed by congress does NOT include vehicles over 25 years old. If you own a vehicle manufactured before 1978 and you want to receive the incentive under a “Cash for Clunkers” program, contact your congressional representatives and request the inclusion of vehicles over 25 years old.
June 1 at 22:08 pm
Dave
This is awesome, I have a clunker with 200k on it ... refusing to buy new until it dies, probably worth $2000. I will buy immediately upon a passage of this one ...
June 1 at 16:07 pm
Anonymous
I think only certain (supposedly inefficient) parts have to be scrapped. I think the rest can be reused.

I like the idea. Don't like taxpayers footing the bill. But, for once, I'd be able to take advantage.
June 1 at 15:51 pm
sharon
I can not trade in my current SUV, I believe it is worth more than $4500. I would have to look around for a cheap SUV clunker to use for this incentive.
June 1 at 14:32 pm
Jim B
Has anyone looked at the negative affect that this bill would have on the automotive aftermarket? This bill requires people to scrap all of the old cars that are traded in. Many of these old cars go to repair shops to be fixed. If they are scrapped, and not fixed, what happens to the repair shops?
June 1 at 13:16 pm
Steve
I think the answer to that is that collectively there is more labor required to build a new car than repair an old one. So net net more works should be saved by selling more cars than keep repairing old ones. Not sure...
June 4 at 10:01 am

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