Underfunded Cash for Clunkers Program Attached to War Spending Bill
The Cash for Clunkers (C4C) program is on its way to Senate approval, as your elected representatives have attached the bill to the $106 billion military spending bill. As the Detroit News reports, the C4C rider sallies forth into legislative battle in the same form as the House version: “Under the program, owners of cars rated at 18 mpg or less in combined highway and city mileage could turn them in for a cash voucher. Buying a new car rated at least 4 mpg higher would earn a $3,500 voucher; a 10 mpg improvement would earn a $4,500 voucher. Pickups would be eligible as long as the new vehicle has a mileage rating of at least 18 mpg and is at least 2 mpg higher than the old vehicle. A new truck rated at least 5 mpg higher than the turned-in vehicle would earn a $4,500 voucher.” One problem: the feds are not planning (i.e., budgeting) for success . . .
The $1 billion set aside for the auto-purchase program is far short of the full cost of such an effort, estimated at $4 billion. The $1 billion is expected to fund the program through Sept. 30, the end of this fiscal year, according to two congressional sources close to the negotiations who asked to remain anonymous. This week, Sen. Debbie Stabenow, D-Lansing, who sponsored the Senate version of “cash for clunkers” legislation, said she was comfortable with winning approval for money to start the program, with the idea that additional funding could be approved later.
In other words, the Congress is hiding the true cost of this program from the American taxpayers. In fact, I wonder from whence that $4 billion estimate arrived. What if it’s twice, five or ten times as much? Would it still receive unqualified political support? Depressingly enough, yes, it would.
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Full sized pickup trucks and SUVs appear to be "category 2" vehicles based on the referenced EPA document: "Light-Duty Automotive Technology and Fuel 2 Economy Trends: 1975 through 2008’ http://www.epa.gov/oms/cert/mpg/fetrends/420r08015.pdf Category 2 vehicles in the house bill are Large Trucks as defined by the referenced document. That document categorizes large trucks as those trucks, vans and SUVs with a wheelbase greater than or equal to 110" for an SUV, 115" for a pickup and 124" for a van. For reference, an Explorer has a 113" wheelbase and and F150 starts at 125". Thus, Explorers and F150s (as well as Tahoes, Silverados, Rams & Tundras) are all "category 2" vehicles for purposes of the House C4C bill. The Ford Edge is a 111" wheelbase SUV. Tada, a category 2 truck! The minimum fuel economy for the new category 2 replacement vehicle to qualify is only 15 mpg. So, as I said in my post near the top of this thread, a New F150, Edge, etc. all would qualify. Now for a particular example: Turning in my personal 1989 F150 (15 mpg) on a new 2009 F150 (17 mpg) would indeed qualify for a $4500 voucher. Turning our 1993 Volvo 240 (20 mpg) in for a new Fusion Hybrid (39 mpg) would mean a $0 voucher. We put about 1,500 miles per year on the F150 and about 10,000 miles per year on the 240. The fuel saved by upgrading the F150 would be just under 12 gallons per year. The fuel saved with the 240 to Fusion hybrid switch would be over 240 gallons. Looks like we will be keeping both of them :). The big winners under this deal are people who trade in an old SUV or truck on a new SUV or truck. The politicians managed to build a strong buy American incentive into the deal without actually using those words.
@John Horner Great research! I didn't fully look at what they meant by category 2 trucks. I'm used to the nomenclature of "light trucks" meaning basically all normal SUVs, vans, and trucks, and just assumed cat2+ referred to things that exceed GVWR of 8,500 lbs. I guess the thing that should have tipped me off is that there are no EPA ratings for such vehicles. The big winners under this deal are people who trade in an old SUV or truck on a new SUV or truck. The politicians managed to build a strong buy American incentive into the deal without actually using those words. There you go - that's the main intent of the bill. I think people are making a mistake in thinking it's primarily about energy savings or emissions reduction. The main point is it's a form of economic stimulus, with the individual beneficiaries mostly concentrated in lower and middle classes, and as you deduce, they are able to make it give American vehicles more of a chance than an aggressive fuel economy target would. If it were only limited to trading in junkers for high FE hybrids, the domestics would be mostly screwed - as all they really have at this point are the Escape Hybrid and its variants and the Fusion Hybrid. Heck, if they put the threshold at 30 mpg, they'd still be mostly screwed. Personally, I predict that most of the vouchers will be for beater old passenger cars. Why? Because beater old trucks can maintain their usefulness for much longer, even if they don't hold much value. It's like in your case - a lot of people keep one around for occasional work.
You can see the final version by looking up HR 2751: http://thomas.loc.gov/cgi-bin/query/F?c111:6:./temp/~c111GqtAB8:e141116: "TITLE XIII--CONSUMER ASSISTANCE TO RECYCLE AND SAVE PROGRAM" is the section of interest.