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Published: Monday, 6/22/2009

Clunker of a law

CASH for clunkers. At first, it sounded like a great idea. But Congress, with for once too-little deliberation and too much speed, has just passed a law intended to give the auto industry a much-needed boost by offering $1 billion in vouchers for people to trade in their old, fuel-inefficient cars for new ones that get better gas mileage.

The old cars are to be scrapped, which in many cases could be a plus for the environment as well as the economy. True, anyone who has ever seen an ancient rattletrap belching smoke, with a cracked windshield and doors held together by wire, will be sympathetic. But that's not really what's going on here.

The cash-for-clunkers law won't touch the real clunkers. Instead, it is designed to help upper and middle class people who want a new car. As Sen. Susan Collins (R., Maine) noted, the law is so poorly written that the government voucher may be used to acquire a new gas-guzzling Hummer H3.

The law applies only to cars made since 1984. You can get a voucher for $3,500 if you buy or lease a new car that gets at least four miles to the gallon more than your old one. You get $4,500 if you get one that improves mileage by ten miles a gallon. But there is a catch. The dealer can't resell your car; it has to be scrapped. So if your car is worth more than the voucher, it would be silly to exchange it.

Moreover, the program isn't limited to the purchasers of domestic cars, whose dealers need the most help. To quote from Consumer Reports, "we found most of the models we'd recommend as replacements are made in Japan." It ought to have been clear that, at a minimum, the cash-for-clunkers idea needed further work. But it sailed right through both the House and the Senate, and here's why.

Congress, as it all too often does, inappropriately attached it to a must-pass appropriations bill to fund the wars in Iraq and Afghanistan.

This is yet another example of Washington succumbing to the entreaties of industry lobbyists without looking carefully at what they were about to do.

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