Cash For Clunkers to Get Green Light?

In a letter to the American people yesterday, President Obama weighed in heavily on the Cash for Clunkers proposals that are currently floating through the halls of Congress.

… we will also find ways to increase car sales while modernizing our auto fleet. Such fleet modernization programs, which provide a generous credit to consumers who turn in old, less fuel-efficient cars and purchase cleaner cars, have been successful in boosting auto sales in a number of European countries. I want to work with Congress to identify parts of the Recovery Act that could be trimmed to fund such a program, and make it retroactive starting immediately.

The Consumer Assistance to Recycle and Save (CARS) Act (H.R.1550) seeks to reward new car buyers with a $3,000 to $5,000 bounty to dump their old gas guzzlers and purchase a more fuel-efficient car or truck.

Opposition to the CARS act has come from sources including the Specialty Equipment Manufacturers Association (SEMA), and a number of foreign auto manufacturers. Nevertheless, with the Obama administration now voicing strong support for the program, the adoption of a federal Cash for Clunkers program seems to be inevitable.

Ready or not America, it’s (almost) time to buy a car.

Yet another (and less generous) proposal surfaced on 3/31.

Introduced by Rep. Jackie Speier and cosponsored by Rep. Mike Thompson, the “Clean Car Rebate Act of 2009” (H.R.1808) seeks to “amend the Internal Revenue Code of 1986 to provide for consumer rebates for purchases of certain new passenger motor vehicles.” The rebate will initially apply to vehicles purchased in 2009 and 2010, with amounts tied to fuel-efficiency. Requirements will be tightened up incrementally, year to year, with years subsequent to 2010 subject to further increases in fuel economy.

Proposed 2009 Clean Car Rebate
Less than 28 mpg $0
28 mpg or more but not more than 29 mpg $1,000
More than 29 mpg but not more than 30 mpg $1,500
More than 30 mpg but not more than 32 mpg $2,000
More than 32 mpg $2,500
Proposed 2009 Clean Car Rebate
Less than 30 mpg $0
30 mpg or more but not more than 31 mpg $1,000
More than 31 mpg but not more than 34 mpg $1,500
More than 34 mpg $2,500

There are plenty of questions that remain to be answered. If this country is to enact a variation of one of these plans, ultimate success may be tied to the ability to use the government rebate as a down payment on the new vehicle.

That’s right … no money down.

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