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Cash for Clunkers

From the Dept. of Mixed Messages: LaHood Touts ‘Cash for Clunkers’

Two weeks ago, Ray LaHood candidly addressed the need to reduce the nation's vehicle miles traveled in order to halt the devastating effects of climate change. But the Transportation Secretary had a decidedly different message today.

clunker.jpeg(Photo: NYT)

"Go out and buy a car, Americans!" LaHood decreed this morning as he and lawmakers from auto-producing states officially kicked off the U.S. DOT's "cash for clunkers" program.

Originally touted as a boost to both the environment and the adrift domestic auto industry, the "cash for clunkers" concept quickly became nothing but the latter after Congress watered it down to apply to cars that get as little as 22 miles per gallon -- and trucks that boast even lower fuel efficiency.

But today's event continued to perpetuate the erroneous claim that $1 billion in public subsidies for new car purchases would help reduce emissions as well as rescue the auto industry.

"This really is a three-for," Sen. Carl Levin (D-MI) said. "It's great for the economy, a great thing for consumers ... third, of course, it's great for the environment itself."

Who the program isn't great for is transit riders hoping to escape their cars. The original "clunkers" bill would have allowed car owners to take their trade-in benefit in the form of transit vouchers, but LaHood said that option is unavailable now that the program has been implemented.

The program also brings bad news in the fine print for owners of serious "clunkers": Benefits are not available for cars manufactured before 1984.

While the DOT estimates that as many as 250,000 autos will be scrapped before the initial infusion of cash runs out, car industry forecasters at Edmunds.com believe only 50,000 extra sales will result, leaving the taxpayers with a whopping $20,000 bill for every new car purchased.

What's more, the program could have an unforeseen cost as dealers figure out how to transport the junked vehicles to a government-approved salvaging plant. Other than the engine, parts of the old "clunker" can be recycled into other cars, but that resale is not required.

The Automotive Aftermarket Industry Association, which represents more than 23,000 car parts and service companies, predicted a "consumer backlash" to the program as more people realize the bureaucratic hurdles and environmental costs of disposing of traded-in cars.

Still, today was a happy occasion for
lawmakers such as Levin and freshman Rep. Betty Sutton (D-OH), who
out-maneuevered senators backing a stronger version of "cash for clunkers" in pushing her version of the program into law.

Echoing an argument used during
the economic stimulus debate earlier this year, Sutton depicted the
"clunkers" idea as, quite simply, a way to keep people employed. In her
home district, Sutton declared, "car dealerships are bustling!" As many as 50,000 jobs in her state depend on the local auto
assembly plant, she added.

And that's good news for the Obama administration. which has steered GM and Chrysler through bankruptcy amid criticism from some in the president's party.

The U.S. DOT's readiness to lend automakers a hand -- no matter the mixed environmental messages that result -- is a testament to the White House's belief in the political benefits of keeping car companies flush.

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