Feds to offer cash for your clunker

The government is trying to stimulate a lot of things, the economy, Wall St., the mortgage industry, and now it wants to motivate you to get rid of your clunker of a car for the good of the country (and the moribund car industry).

A "Cash for Clunkers" measure introduced this week by US Senators Dianne Feinstein (D-Calif.), Susan Collins (R-Maine), and Charles Schumer (D-N.Y.) would set up a  national voucher program to encourage drivers to voluntarily trade in their older, less fuel efficient car, truck or SUV for a car that gets better gas mileage.

Car owners could get only one voucher in any three-year period. Dealers and scrap recycling companies could get payments of $50 per vehicle. And the overall program could cost as much as $2 billion a year.

Should the bill pass, the "Cash for Clunkers" program would reimburse drivers with a credit of $2,500 to $4,500 for drivers who turn in fuel-inefficient vehicles to be scrapped and purchase a more fuel efficient vehicle.

According to the senators the program could save between 40,000 to 80,000 barrels per day of motor fuel by the end of the fourth year.

The bill could also educe greenhouse gas emissions between 6.6 million metric tons to 7.6 million metric tons, or the equivalent of removing 1.1 million to 2.2 million vehicles from the road in one year. It should also reduce nitrogen oxides, which cause ground-level ozone (a leading cause of respiratory health problems, like asthma), by 3,043 short tons (2,761 metric tons) by 2013.  All of those promises could come true if an estimated 500,000 to 1,000,000 vouchers are issued per year, the senators said.

The catches:

  • The traded-in vehicles must have a fuel economy of no more than 18 miles per gallon;
  • Auto needs to be in be in drivable condition, and have been registered for at least the past 120 days;
  • The voucher needs to be used towards the purchase of a vehicle that has value of less than $45,000, is model year 2004 or later, and meets or exceeds federal emissions standards;
  • Vouchers could also be redeemed for transit fares for participating local public transportation agencies.

For traded-in vehicles that are model year 2002 and later, drivers would receive a voucher for: The purchase of a new vehicle: $4,500; the purchase of a used vehicle: $3,000; a transit fare credit: $3,000.

For traded-in vehicles that are model year 1999 - 2001, drivers would receive a voucher for: The purchase of a new vehicle: $3,000; the purchase of a used vehicle: $2,000; a transit fare credit: $2,000.

For traded-in vehicles that are model year 1998 and earlier, drivers would receive a voucher for: The purchase of a new vehicle: $2,000; the purchase of a used vehicle: $1,500; a transit fare credit: $1,500.

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