Is Congress Driving Drunk?

Imagine a bill making its way through Congress that would boost the economy while protecting the environment -- or, I should say, boost the economy by protecting the environment. This dream bill, furthermore, would be a bi-partisan affair. Who could say no to that? Well, apparently Congress could.

This dream bill is a real life bill -- it's called C.A.R.S., or "Consumer Assistance to Recycle and Save Program", and is classified as an Automotive Stimulus bill. The idea behind the legislation is startlingly simple: it would provide up to $4,500 in federal vouchers to Americans who trade in their old, gas-guzzling, polar bear-killing "clunker" cars for a more fuel efficient, environment-friendly alternative. For good reason, then, the bill is being called "Cash For Clunkers."

Until just a few hours ago, the bill was slated to easily get passed as part of an Iraq appropriations bill. Both Democrats and Republicans had lined up behind it and were looking forward to both a substantive and political win. But Congress seems to have gotten in its own way in the last few hours since a new procedural rule called Rule 28 is being debuted to thwart Cash For Clunkers.

Rule 28 (which even sounds a little nefarious) states that a senator can call a point of order on any bill that was created in conference and not initially passed by either the House or Senate. Once the point of order has been called, 60 senators must vote to waive it in order to save the bill.

Cash For Clunkers originally achieved bi-partisan support on the condition (given on record) by fiscally conservative Republicans that funding for the program come from an existing stimulus bill and not from additional deficit spending. However, the last minute point of order changes made to the bill call for the program's funding to come from deficit spending. A few Congressional Republicans, including Judd Gregg (who is threatening to call a Rule 28 point of order) and one of the bill's authors, Senator Sam Brownback, cannot abide: after publicly pledging to support Cash For Clunkers only if it did not increase deficit spending they cannot vote to carry the revised bill through without appearing to be hypocrites. (And we wouldn't want that!)

So Cash For Clunkers is on the verge of being scrapped. This is a shame not just because it was probably the cleanest and most sensible bill to be produced by the 111th Congress, but because it would make a real, immediate, and very significant economic and environmental difference at a critical time.

For American car owners, a $4,500 voucher would mean not only an extra few thousand dollars in the bank but an opportunity to buy a car that could save that amount of money every year thereafter on fuel and maintenance costs. Further, eligibility for a voucher was designed to be shockingly simple: for regular cars (not SUVs or trucks), you need only pick out a car with an improvement of at least 10 MPG over your last car, which cannot be more than 25 years old. For SUVs and various kinds of trucks the rules are slightly different. You can take a look at them at the Cash For Clunkers website.

In terms of the American economy, the impact of the bill could be staggering. As we all know, the American auto industry is at risk of becoming an industrial jalopy. American car manufacturers are seeing 30-40% volume loss and even though jetsetting auto execs might be getting their just desserts (or, looking at some of their salaries, are just getting dessert), the millions of mechanics, parts dealers, salesmen, and factory workers -- not to mention the job loss of collateral industries -- are just getting screwed.

Cash For Clunkers presents a way out of this mess. Barclays analysts are projecting that the vouchers could fuel up to 1 - 1.5 million additional car sales each year. With auto sales falling below the 10 million monthly sales mark for five straight months, Cash For Clunkers is literally the only legislative tourniquet that can stop the hemorrhaging.

For some reason, however, the press has been silent on the issue. Advocacy organizations like the Automotive Consumer Council have been forced to pick up the slack, alongside a more unlikely group of advocates -- Latin American celebrities such as Dancing With The Stars' Cristian de la Fuente and Ugly Betty star Angelica Vale, both of whom have come out to publicly support the bill and the campaign to inform Spanish speaking Americans about it.

And, not too surprisingly, parts of the private sector are also stepping up to take action. One of the innovators of the cash-for-clunker voucher is Paragon Cars one of the largest dealers in the country. "While Paragon's own cash-for-clunker program has a local or even regional effect on the economy and environment, the country on a whole needs a congressional initiative like this bill to make both the serious economic and environmental impact we need," said Brian Benstock, one of the partners of Paragon.

Of course auto dealers like Paragon have an interest in the legilsation, however, that's part of the strength of the bill: it's a win-win-win for the auto industry, Congress, and the American people. Dealers around the country are following Paragon's lead in pushing for the bill, which is to simply educate the public as to what it means for car-owning households. "Customers and dealers will benefit from this stimulus program so we want to educate everyone on how to take advantage of it, whether they do business with us or not," Benstock said, noting that Paragon set up their own Cash For Clunkers information site, specific to New York residents.

The bill goes to vote either Tuesday or Wednesday, which means that unless urgent action is taken a sensible, environmentally responsible, and economically meaningful piece of legislation will be sunk by a procedural rule. That might be business as usual for Congress but for most Americans during a recession it will come across as neither business nor usual.

Comments

[David Mason]

Anything you subsidize, you get more of. This rewards people who bought gas guzzlers during an age when they knew or should have known not to. Those who had society in mind since 84 are out of luck with their old rust buckets. Much like the mortgage "rescues", this is a reward for having acted foolishly in the past, especially as it assists those who by definition never NEEDED a gas guzzler (for business, for example). Thanks, Uncle Sam, for transferring money from the responsible to the self-centered mouth breathers. There is already a program that incentivizes the purchase of clean and lean burn vehicles through tax credits. Notwithstanding Jeff R's reasonable point, why not let anyone have access to this benefit, and tax the continued use of polluting vehicles (i.e., have a consequence for not playing nice with others)? It might pay for the tax incentive to people who CAN live without the tinted window Escallade, and those who can't, especially if for business reasons, can pass on the expense to their customers.

[kcampese]

60% of the cars that are currently donated to charity will be eligible for voucher under the cash for clunkers program. Since the tax deduction for donating a car is only $500 or what the car sells for, charities won't be able to compete. A better idea is to just go back to allowing the donor to claim the book value for their car donation. This way all vehicles are eligible, the government doesn't have to spend $4 million on vouchers and administer a program with rules which are not enforceable! Since many of the cars that are donated are recycled there is an environmental benefit as well!

[ohiodem250]

Wow, that's actually a hell of an idea!

[brandnewstuff]

Thanks for the article as I eat breakfast!

[Jeff Rankine]

Although this proposal means well, when look at the economics behind it a little closer it actually may be WORSE for global warming.

The issue is people aren't taking into account the sunk cost (in terms of emissions) of the clunker you are scrapping. There was a whole bunch of CO2 emitted to create that old car, and if we buy a new efficient one we need to take into account the CO2 emitted to produce the new vehicle when comparing the two options (keeping versus replacing). Note that in the clunker's case the CO2 emitted in production is sunk since the car was already built.

The carbon footprint associated with the production of this new car is VERY significant. Think about all the elements of production: the mining of the raw materials, shipping of all the parts from suppliers, the footprint of the plant and actual assembly etc. This all has to be added to the carbon cost of a new car.

According to a recent Wired study, the carbon savings you would get by scrapping your existing vehicle to buy a brand-new vehicle do NOT cover these additional costs (in normal circumstances).

Although it is counter-intuitive, it doesn't make you feel good, and it would actually hurt the economy, continuing to use a older and less-efficient car (that is otherwise working OK) may be better for global warming than buying a brand new Prius.

It sounds awful but those are the facts.

[mergina]

You are talking about Washington politicans here. Plans within plans, schemes within schemes, under the table MONEY MONEY MONEY, Who do you love?

[ferrarimanf355]

Is the 25 year cutoff still in there?

http://www.sema.org/sema-enews/2009/24/sema-wins-protection-collector-cars-and-parts-0

[ohiodem250]

While I fully support the CARS provision I also 100% completely am in favor of Rule 28. That rule could be one of the fairest rules in the Senate. With the way they push these omnibus bills through the US Congress I'm glad this exists. Just think about how this CARS provision is being pushed - through an Iraq War spending bill? What? How does that make sense? It doesn't. Keep Rule 28!