Congress’ plan: Cash for Clunkers

By Jim Roth | Phillips Murrah P.C. | The Journal Record

[ JUNE 15, 2009 - OKLAHOMA CITY, OK ] - My first car was a 1973 Mercury Monterey Custom that I am convinced could seat 28 friends comfortably. It was huge. It had fender skirts, lap seat belts and a 429-cubic-inch V-8 engine that topped out at 109 mph one night, or so I am told.

My parents described it as a “bumper car” that would help keep my brother and me safe as we learned to drive. It served its purpose. In 1984, when I started driving, gasoline was 84 cents per gallon, and I had to budget for my weekly gas money. Somehow I never thought about the single-digit fuel economy, only about how many miles I could afford to drive.

Today’s families can always cut back on the number of miles their lives require they travel for work, school, church, family needs and everyday life. Instead, and especially in this economy, American families need safe, affordable cars that do not limit their livelihoods, but instead help them. And if you’re driving an old clunker, like I did, an idea for relief may be on its way. It’s called “Cash for Clunkers.”

Energy costs and the plight of the American auto industry have become increasingly intertwined in the national dialogue, which is evidenced by the “Cash for Clunkers” proposal that recently passed through the U.S. House of Representatives. The program aims to give consumers a cash incentive to trade in their older low-efficiency models with the condition that they then purchase a new vehicle with more efficient miles-per-gallon ratings.

Here’s how it would work. The proposal, which requires participants to trade in drivable vehicles with at least an 18-mile-per-gallon rating, would give vouchers to the passenger car consumer for staggered mileage upgrades. The plan would give a $3,500 voucher for the purchase of a new model with a mileage improvement of four miles per gallon and a $4,500 voucher for the purchase of a model with mileage improvement of at least 10 miles per gallon. There also are requirements for consumers of light-duty, heavy-duty and work-rated trucks.

Like everything in Congress, people are lining up for and against this idea. Opponents of the bill already are touting the inapplicability of the incentive to lower-income individuals who couldn’t afford a new car anyway. Other critics have proclaimed that this taxpayer-funded program will help auto companies only and not the average hardworking American. Proponents are applauding the bill’s goal of putting more energy-conscious cars on the road and for stimulating automobile sales. Despite either persuasion, the passage of the proposal through the House should be a positive sign to everyone interested in a national effort towards a greener energy future and some economic relief for commuting Americans.

The “Cash for Clunkers” program shows creativity from both sides of the aisle in addressing the interconnectedness of modern energy concerns and the auto industry. By acknowledging the role that the cars on our roads play in the greater scheme of our nation’s energy security, the House inherently is showing the country that it is willing to tackle the energy issue in ways that are less divisive and more applicable to average Americans.

In essence, the plan is centered on the common consumer’s responsible consumption of the fuels that we already have, with the added (and much needed) benefit of giving a portion of the public an incentive to purchase American-made vehicles. It is true that the program will not reach every American; an individual who could not afford a new $12,000 car will not be able to afford a new $15,000 car even with a $4,500 voucher. Even so, the bill should have the welcomed consequence of changing more American attitudes, among consumers and producers of automobiles, towards cleaner-burning and more efficient vehicle options.

Further, polls have shown that groups of potential purchasers of new vehicles have put their plans on hold until the “Cash for Clunkers” program either lives or dies in Congress. If effectively amended and passed in the Senate, the plan could encourage a large portion of the middle class to purchase the more fuel-efficient car they’ve been waiting for at a time that the industry needs it the most.

“Cash for Clunkers” is not a perfect plan and it will not solve the auto industry’s woes or quench the nation’s thirst for gasoline consumption. The proposal could, however, capture the American disdain for shock at the gas pump, which started last summer, and translate it into a real catalyst for putting more energy-efficient vehicles on the road.

If I still drove my 1973 Mercury Monterey Custom, I would be thrilled to see Congress help me sell it to afford a new American-made CNG vehicle, which at today’s price for natural gas, can be fueled at the equivalent of 85 cents per gallon. That’s a win-win for American families.

Jim Roth, a former Oklahoma corporation commissioner, is an attorney with Phillips Murrah P.C. in Oklahoma City, where his practice focuses on clean, green energy for Oklahoma.