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Critics Blast ‘Cash for Clunkers’ $2 Billion Lifeline

Suvs.jpg
Suvs.jpg

Even as House lawmakers are celebrating their remarkably swift move to infuse the popular cash for clunkers program with additional funds, some lawmakers and environmentalists are warning that extending the program is premature without knowing what it even does.

Of the $1 billion committed under the initiative — which offers drivers up to $4,500 to trade their gas-guzzlers for more fuel efficient vehicles — the Obama administration has released data on the trades surrounding less than $69 million. Without further information about what models are being scrapped, what models are being sold, and the environmental benefits of the swaps, critics worry that the program might be failing in its stated goals of reducing emissions and a reliance on foreign oil.

“A billion dollars has been spent on a program that could conceivably be a disaster for the environment, and without even waiting to see where that money went, they’re throwing more money into the pot,” said Daniel Becker, director of the Safe Climate Campaign, which advocates for better fuel efficiency. “This whole thing is a blind experiment. Congress is making fact-free decisions.”

Launched just this week, the cash for clunkers program has already blown through its initial $1 billion in funding — money that was projected to last though October. House lawmakers rallied with rare speed Friday to pump an additional $2 billion into the program, just hours before they departed for a five-week recess.

Supporters of the program, lining up behind Michigan’s powerful delegation, argue that it offers a slew of economic and environmental benefits befitting both the recession and the threat of climate change. On the House floor before the vote, Speaker Nancy Pelosi (D-Calif.) called the extension “a very positive, bipartisan initiative to help our auto industry, to help consumers, to grow our economy, to do it in an environmentally sound way.”

The House vote was 316 to 109, with 77 Republicans favoring the bill and 14 Democrats opposing it.

Among those 14 Democrats was Rep. Earl Blumenauer (Ore.), who said afterward that he felt “uncomfortable” voting to extend a young program around which so little is known. “We don’t know actually what we’ve been getting,” Blumenauer said in a phone interview. “We want to see the data.”

He’s not alone with that request. On Friday, Sens. Dianne Feinstein (D-Calif.) and Susan Collins (R-Maine) sent a letter to Transportation Secretary Ray LaHood urging the administration to release more data to inform Congress’ next move on cash for clunkers. While the program has proven itself to be an effective catalyst for vehicle sales, the lawmakers wrote, “Congress needs this data in order to determine if the fleet modernization program delivered significant fuel economy gains and oil savings.”

The skeptics have some reason to be wary. The latest official DOT figures indicate that, through Tuesday, less than $69 million of the initial $1 billion had been spent to facilitate roughly 16,350 vehicle sales. About 62 percent of those purchases were for new cars — a good sign in the eyes of environmentalists interested in minimizing the number of trucks and SUVs on the road. But until further analysis reveals what trades were encouraged by the subsequent $931 million, some lawmakers and public interest groups oppose the additional funding.

Lena Pons, policy analyst at Public Citizen’s Congress Watch Division, said the popularity of the program comes as little surprise. Who, after all, wouldn’t want a $4,500 gift from Washington? But popularity is no indication that the program is meeting its stated goals. “Before appropriating any additional funds,” Pons said in a statement, “Congress should study whether the program is working.”

The Senate is expected to take up the cash for clunkers extension next week, and already a small, bipartisan contingency is threatening to block the proposal. On Thursday, Feinstein and Collins issued a statement arguing that any renewal of the program “must go further in advancing the goals of better fuel efficiency and greater emissions reductions.”

“We will not support any bill that does not meet these goals,” the senators said.

On Friday, they got some more backing when Sen. John McCain (R-Ariz.) announced his intention to filibuster the bill.

There are also concerns, both on and off Capitol Hill, about the source of the funding. The $2 billion was siphoned from stimulus funds earmarked for a federal loan program encouraging the use of environmentally friendly technologies.

After the House vote, President Obama gave a short speech vowing to work with Congress to replace that funding sometime “down the road.”

Under the current program, drivers can get between $3,500 and $4,500 when they trade in their gas-guzzling cars, trucks and SUVs for new vehicles with better fuel efficiences. Yet the efficiency thresholds were set so low that consumers can trade in their old clunker for a brand new clunker — a boon for the automakers and dealers, but hardly a way to reduce the greenhouse gasses that contribute to global warming.

“They weren’t set very high,” Blumenauer said of the mileage guidelines, “so it wasn’t getting the worst of the worst off the roads.”

Feinstein and Collins, along with Sen. Charles Schumer (D-N.Y.), have sponsored a competing bill that sets stricter fuel efficiency thresholds for the newly purchased vehicles. The lawmakers say their proposal would result in oil savings that trump the existing program by more than 30 percent.

When the initial $1 billion program passed the Senate in June, Feinstein told reporters that Senate Majority Leader Harry Reid (D-Nev.) had given her “absolute assurance” that any extension would be altered so that the fuel efficiency requirements were more stringent. With the House leaving town, however, Reid’s office indicated Friday there’s little chance that Senate leaders will alter the House-passed bill, particularly with Obama urging quick passage of the existing extension.

That’s bad news in the eyes of environmentalists, who worry that the program is following the path of a similar initiative in Germany, which went from a 1.5-billion-euro program to a 5-billion-euro program in just six months.

“This is turning into a methadone program for addicted automakers,” Becker said. “They have no incentive to turn it off.”

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