The United States House of Representatives has approved cash-for-clunkers legislation offering owners of gas-guzzling vehicles a voucher worth $4500 toward the purchase of a new, more fuel-efficient vehicle.
The bill easily gained House approval, with a final tally of 298 for and 119 against the legislation. The bill still must be approved in the Senate, and attached to larger legislation before it can be signed into law.
The House version of the bill allows owners of vehicles that achieve fuel economy of less than 18 miles-per-gallon (EPA combined rating) to receive a voucher worth $3500 or $4500 toward the purchase of more fuel-efficient models. The amount received depends on how much better the fuel efficiency is compared to the old vehicle. The legislation supports the purchase of vehicles sold by all manufacturers.
Under the legislation, the old cars would be crushed or recycled, meaning traded-in vehicles would have no resale value. Owners of vehicles that are worth more than $4500 have no incentive to trade in for the voucher because of this requirement. In addition, the number of cars that achieve less than 18 mpg on roads today is small, which shifts the benefits of the program mostly to SUV and truck owners.
The House legislation sets aside $4 billion for the program, which the Congressional Budget Office estimates will cover about 625,000 vouchers – not many, considering sales are off by millions compared with the least three years.
Source: The Detroit Free Press