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By Samuel R. Avro on Feb 6, 2009 with no responses

‘Cash For Clunkers’ Fuel Efficiency Perk Pulled From Stimulus Bill

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Trading in a car like this for a more fuel-efficient vehicle could have earned you $10,000 had the proposal been approved.

The “Cash for Clunkers” amendment to the United States Senate stimulus package, which would have given $10,000 to owners of old cars toward buying a newer, more fuel-efficient vehicle, was pulled by backers of the plan after coming under pressure from foreign automakers.

The vehicle had to be at least 10 years old, owners would have to have family income of less than $75,000 a year, own fewer than three vehicles and have owned the vehicle they’re trading in before Jan. 16, under the plan drawn up by by Sen. Debbie Stabenow, D-Mich., and Sen. Tom Harkin, D-Iowa.

New cars would need to get 25 MPG, while trucks would need to average 20 MPG. The new model would have to get at least 5 miles more to the gallon than the old ‘clunker’ that was traded in.

According to the proposal, the money would have to be spent toward a U.S. manufactured vehicle – which upset the foreign automakers who say it would violate international trade agreements.

The bill was also criticized by some involved in the U.S. auto industry, who contend that the seemingly good idea would bring about unintended consequences.

“We are thrilled that this amendment was withdrawn from the stimulus package,” said Kathleen Schmatz, president and CEO of the Automotive Aftermarket Industry Association (AAIA). “This amendment was full of potholes from the beginning and once the Senators were informed of all the unintended harmful consequences that would have resulted from inclusion of this amendment in the bill, they made a very wise and informed decision to remove this amendment from the stimulus package.”

AAIA is a Bethesda, Md.-based association whose more than 23,000 member and affiliates manufacture, distribute and sell motor vehicle parts, accessories, service, tool, equipment, materials and supplies. Through its membership, AAIA represents more than 100,000 repair shops, parts stores and distribution outlets.

“Those seeking a ‘quick fix’ have failed to consider the impact of the program on lower and fixed income families as well as charities. By taking vehicles off the road that might be sold as used, the program will raise the price for all used vehicles, thus impacting those on limited income that cannot afford new vehicles,” said Aaron Lowe, vice president of government affairs for AAIA. “Further, since the parts on those vehicles that are scrapped could be sold as used or reconditioned, the program will cause an increase in repair prices for consumers.”

Another proposal under consideration in the stimulus bill is a $600 million plan for the government to purchase tens of thousands of fuel efficient vehicles to replace inefficient models in the fleet.

President Barack Obama is all for an upgrade to the government’s fleet.

“It will not only save the government significant money over time, it will not only create manufacturing jobs for folks who are making these cars, it will set a standard for private industry to match,” Obama said.

But Senate Minority Leader Mitch McConnel mocked the plan and said it would be wasteful spending.

“I doubt if the government buying $600 million worth of automobiles would provide the kind of stimulus that we’re talking about here,” McConnell said Sunday on CBS’s program “Face the Nation.”