Constructive criticism of the "Cash for Clunkers" bill

The Consumer Assistance to Recycle and Save (CARS) Program (also known as “Cash for Clunkers”) will receive at least $1 billion in funding this year now that Congress has passed the $106 billion Iraq and Afghanistan war supplemental appropriations bill.  

After the jump I provide some legislative history and constructive criticism of Cash for Clunkers, which Representatives Bruce Braley of Iowa and Betty Sutton of Ohio championed as a reward for consumers who trade in inefficient old cars and trucks for new models.

The CARS bill was attached to the Waxman-Markey American Clean Energy and Security Act in the spring. With prospects for that climate-change bill uncertain, the U.S. House approved Cash for Clunkers as a stand-alone bill earlier this month. Click the link for details about the rules and incentives outlined in that bill.  

The House and Senate then agreed to attach Cash for Clunkers to the $106 billion Iraq and Afghanistan war supplemental appropriations bill that was in conference at the time. The main differences were that the bill attached to the supplemental included only $1 billion in funding for CARS (as opposed to $4 billion) and only funded the program from July 1 through November 1 of this year (instead of for a whole year).

The war supplemental passed the House with some difficulty on June 16. Iowa Democrats Braley, Dave Loebsack and Leonard Boswell voted for it, and Republicans Tom Latham and Steve King voted against (roll call here). Incidentally, isn’t it interesting that Latham and King suddenly are against funding our troops at war now that George W. Bush is no longer president?

Senate Republicans tried to strip the CARS program from the supplemental on June 18, but Democrats barely managed to overcome a filibuster. In that 60-36 Senate vote, Iowa’s Tom Harkin voted for keeping Cash for Clunkers in the supplemental, while Chuck Grassley voted to remove it. The supplemental bill as a whole easily cleared the Senate on a 91-5 vote, with both Harkin and Grassley voting yes.

A spokeswoman for Congressman Braley told me last week that he will continue to seek full funding for the CARS program, so that it can run for a year with a budget of $4 billion. According to, “Some legislators favored a competing bill, with higher MPG requirements, from Senator Diane Feinstein (D-CA).”

In theory, a CARS program would have strong environmental benefits, because older vehicles “emit a disproportionate amount of emissions.” Braley’s original bill included stronger fuel-efficiency standards, but amendments demanded by other House members removed most of the potential environmental gains, making the CARS program little more than a stimulus for new car purchases.

The energy blogger A Siegel wrote a detailed critique of the final Cash for Clunkers bill at Get Energy Smart Now. Excerpt:

Why is this a bad bill, on both basic policy and basic analytical reasons?

  1. The fuel saving requirements are absurdly low.

  2. The actual oil demand reduction per tax dollar invested is absurdly low.

  3. The bill, as structured, is overly restrictive in a counter-productive way.

  4. There is a basic question as to equity.

  5. This is structured poorly, using “mpg” which provides less visibility on impact than the better “gpm” (gallons per mile).

There are good arguments against having the government offer Cash for Clunkers year after year. Doing so could create an incentive for consumers to delay new car purchases until their current vehicles were old enough to qualify for the program. That said, if Braley decides to push for a similar bill to help the automotive industry next year, I hope he and co-authors will take some of A Siegel’s advice. He makes a compelling case for a “gallons per mile” standard, which would decrease oil consumption much more than the current bill.

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