'Cash For Clunkers' Would Help Car Buyers, Climate

Lawmakers on the House Energy Committee are putting the finishing touches on a climate change bill that is exposing rifts among Democrats. But one idea in the bill has support from all sides. "Cash for clunkers" is a voucher plan that helps car owners trade in their old rides for more fuel efficient models.

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STEVE INSKEEP, host:

Now Congress is trying to help out the auto industry with a proposal that's getting bipartisan support. It's an idea tucked into a more contentious climate change bill. It involves cash for clunkers, which means that car owners could trade in their old rides for more fuel efficient models. NPR's Audie Cornish reports.

AUDIE CORNISH: Cash for clunkers is an idea aimed squarely at consumers like Danna Schwartz(ph) of Portland, Oregon.

Ms. DANNA SCHWARTZ: We live in a state that the green factor is all over us every day, 24/7, and so I think we're very conscious of helping the environment in any way.

CORNISH: But Danna and her husband Jerry own a car that gets 16 miles to the gallon, and the sour economy put off their plans to upgrade.

Ms. SCHWARTZ: The energy efficient cars are pricier to start out with. So, you know, we've talked about them before, but it's just - right now out of our range.

CORNISH: While the Schwartz's visit the capital grounds here in D.C., Congress is trying to figure out how to get them into an auto showroom back in Oregon.

Representative ED MARKEY (Democrat, Massachusetts): This is electroshock therapy for the economy.

CORNISH: That's Massachusetts Congressman Ed Markey, a senior democrat on the House Energy and Commerce Committee.

Rep. MARKEY: We think that we can move 800,000 or a million vehicles off of the showroom lots and into the driveways of Americans all over the country.

CORNISH: They call it cash for clunkers, but it's really cash for guzzlers. It gives vouchers to people who trade in cars, trucks or SUVs that get 18 miles per gallon or less and buy new vehicles that do better. The condition and age of the vehicle don't matter. It's all about the MPG, and the vouchers get bigger as the fuel savings increase. Environmentalists say it's too easy for buyers to get vouchers for small improvements in mileage, and some want lawmakers to put the bar higher.

Representative STEVE ISRAEL (Democrat, New York): I am disappointed by the compromise.

CORNISH: New York Congressmen Steve Israel had been pushing a version requiring car buyers to beat current minimum fuel standards by 25 percent before they get a voucher. But he says he'll support the current language if he has to.

Rep. ISRAEL: I will support it because I don't believe in saying no to 50 percent because I couldn't get 100 percent. But it is a disappointing compromise.

CORNISH: But Congressman Markey says the mileage improvements, however small, do matter.

Rep. MARKEY: We are trying to change the culture in our country. We're trying with this legislation to put a focus on the fuel efficient vehicles that a previous generation of automotive purchasers avoided purchasing.

CORNISH: Funding details for the voucher deal are still in negotiation, but right now, lawmakers hope to pay for at least a million vouchers using several billion dollars left over from the economic stimulus package passed in February.

Audie Cornish, NPR News, the Capitol.

INSKEEP: And we have one more note this morning on what the future of the auto industry may look like. General Motors has made a disclosure in a filing with the Securities and Exchange Commission, and it has said that bankruptcy is possible for the company if it doesn't get enough takers on an offer to swap its bond debt for stock.

GM says if it goes into bankruptcy, it would likely sell most of its assets to a new company that would go on and try to do business while it would liquidate the rest if it has to seek bankruptcy protection.

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