"Cash for Clunkers becomes Handouts for Hummers"
As a means of reducing greenhouse gas emissions, the “cash for clunkers” deal Congress appears to be on the verge of embracing is probably among the least cost-effective uses of federal dollars one could imagine (see here). That doesn’t mean it won’t have benefits to the auto industry, but nobody should sell it as a GHG reducer. Today’s “guest bloggers” are Senators Dianne Feinstein (D-CA) and Susan Collins (R-ME), whose piece, “Handouts for Hummers,” was first published in today’s Wall Street Journal.
It’s amazing how quickly a good idea can go bad in Washington. In January, we joined with Sen. Charles Schumer to introduce a bill that would allow Americans to trade in gas-guzzling cars in exchange for vouchers worth up to $4,500 toward the purchase of vehicles with greatly improved fuel economy. This legislation was modeled after programs in California and Texas that improved fuel efficiency, reduced pollution, and stimulated auto sales.
Our “Cash for Clunkers” proposal was a win-win for the environment and the economy. Then Detroit auto industry lobbyists got involved. Soon a rival bill emerged in the House, tailored perfectly to the auto industry’s specifications.
The House bill was written so quickly that one of its main components — a provision that would have excluded any vehicle manufactured overseas — had to be removed because it violated trade laws. But the worst item on the auto industry’s wish list is still at the heart of the bill — a provision that undermines fuel-efficiency standards.
On Tuesday, the House approved this legislation, which would subsidize the purchase of a new Hummer H3T (16 mpg) or a new Dodge Ram 1500 4×4 truck (15 mpg), but not a two-year-old Ford Focus (27 mpg) or used Chevy Colorado (20 mpg). A companion bill is pending in the Senate.
On Monday, we introduced a new version of our bill, which keeps reasonable fuel-efficiency standards in place. It would result in at least 32% more oil savings than the auto-industry bill and significantly reduce greenhouse gas emissions. Each participating driver would save up to 176 gallons of gas a year, according to the American Council for an Energy Efficient Economy. In addition, our bill would permit the purchase of used vehicles, helping lower-income Americans to participate.
Last summer, $4-a-gallon gas prices forced many Americans to park their guzzlers. Today, average gas prices are creeping back up toward $3 a gallon. Drivers in a tough economy need more incentives for fuel efficiency, not subsidies for inefficient vehicles that will cost more in the long run.
The bill being pushed by the auto industry is simply bad policy. Encouraging the purchase of inefficient vehicles undercuts the Ten-in-Ten Fuel Economy Act of 2007, which mandates at least a 10 mile-per-gallon increase in Corporate Average Fuel Economy standards over the next 10 years. And yet less than two years after passing this landmark bill we are weighing legislation that would create handouts for Hummers.
The truth is, the House bill and its Senate counterpart are another big bailout. These bills are expertly designed to provide Detroit one last windfall in selling off gas guzzlers currently sitting on dealer lots because they’re not a smart buy.
Supporters of the auto industry approach say that our bill’s higher fuel-efficiency requirements give foreign automakers an advantage. But there are plenty of fuel-efficient vehicles made by American companies that would qualify, including the Ford Escape, the Dodge Caravan, the Jeep Compass, the GMC Yukon Hybrid, the Chevrolet Cobalt, the Chrysler Sebring, the Saturn Aura Hybrid, the Pontiac Vibe, and many other models.
Trucks with above-average fuel economy for their class would also qualify. They include the Chevy Silverado, the two-wheel-drive Ford F-150, and the Toyota Tacoma (built in California). Drivers could also choose from an array of Toyotas and Hondas built by American workers in U.S. factories — such as the Toyota Camry (built in Kentucky) and the Honda Accord (built in Ohio).
The bottom line is that fuel-efficient vehicles should be the main focus of any “Cash for Clunkers” bill. So Americans need to make their voices heard, before Congress spends billions of dollars to put more gas guzzlers on the road at the behest of the auto industry. Our approach is good for both the economy and the environment.