House passes U.S. “cash for clunkers” bill

The House has officially approved a new “cash for clunkers” bill that is supposed to boost new vehicle sales by incentivizing people to turn in their old gas-guzzling cars and trucks for vouchers worth up to $4,500 to buy more fuel-efficient vehicles.

With encouragement from President Obama, the House approved the bill 298-119. The auto industry has been lobbying for such incentives after months of poor sales.

The bill has been under negotiations for months as lawmakers tried to find a solution that increases car sales while also providing some environmental benefits. Similar programs in Europe that have already boosted auto sales.

While opponents feel the bill fails to include incentives for used vehicles and represented an “artificial” incentive, the House and Senate appropriators were already planning to raise $1 billion to fund the “cash for clunkers” program initially, which aims to generate about 1 million new car sales. The yearlong vehicle program is expected to cost $4 billion.

Under the House bill, car owners could get a voucher worth $3,500 if they traded in a vehicle getting 18 mpg or less for one getting at least 22 mpg. The value of the voucher would grow to $4,500 if the mileage of the new car is 10 mpg higher than the old vehicle.

Owners of SUVs, pickup trucks or minivans that get 18 mpg or less could receive a voucher for $3,500 if their new truck or SUV is at least 2 mpg higher than their old vehicle. The voucher would increase to $4,500 if the mileage of the new truck or SUV is at least 5 mpg higher than the older vehicle. Consumers could also receive vouchers for leased vehicles.

The bill would force dealers to ensure that the older vehicles are crushed or shredded to get the old cars off the road. It was intended to help replace older vehicles, built in model year 1984 or later. Opponents of the bill fear that many gas-guzzling SUVs would qualify as a new car purchase, considering they are technically more efficient than many older trucks.

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