'Cash for Clunkers'

On the surface, it sounds like a good idea. Provide financial incentives for owners to take their old, high-emissions vehicles off streets and highways across the nation and replace them with more energy efficient, lower-emissions vehicles. Hence, cleaner air and, as a side benefit, increased new car sales at a time when the auto industry is facing very tough times.

Those supporting the idea will suggest looking at similar programs in Germany, France and Britain. The fuel efficiency program in Germany, where gasoline is selling for just over $6 per gallon, did boost auto sales by about 20 percent.

Even in America, some states have used "cash for clunkers" programs with some success. California, for instance, has spend about $50 million per year to give low-income residents up to $1,500 to scrap vehicles that fail emissions tests or $500 to have them repaired. In light of new emissions guidelines, the state is considering expanding this program.

As part of a nearly 1,000-page energy bill, Congress is considering a hastily devised "cash for clunkers" program. The basics are these: Trade in your vehicle for any 2009 model that gets just four miles per gallon more than yours, and you get a $3,500 taxpayer subsidy.

If that new 2009 model gets 5 miles per gallon more for trucks or 10 gallons more for cars, you stand to receive a subsidy of $4,500. Estimates for starting a cash incentive program in the United States run from $3.5 billion to $4 billion. With backing from some powerful Democratic members of Congress, the Obama White House supports the program.

But federal "cash for clunker" programs have come before Congress and usually have died before becoming law. This one should also.

There are at least two major problems. First, it provides incentives for people to trade in cars that get only slightly better gas mileage than they are getting on their current cars. Your SUV getting 16 miles per gallon would bring you $3,500 if you traded it in for one that gets 20 miles per gallon. Second, the auto industry needs to get middle-income people back into the showrooms. Most people still buying new cars have household incomes of $100,000 or more. Middle-class consumers, not to mention poorer families, are staying away from auto showrooms in droves, and they traditionally buy a lot of used cars.

A well thought-out "cash for clunkers" program could be of some benefit in helping to clean our air and provide further incentives to aid the auto industry, but the one before Congress isn't it.

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