Cash for Clunkers Bill gets the nod of the Senate and House
The Cash for Clunkers bill gets the approval of the negotiating teams from both the
Senate and the House. This legislation is just one of the lifesavers planned by the government for the U.S. auto industry. It aims to revive the car industry back to its state prior to the recession.
The legislators have allocated $1 billion for the programs proposed in the Cash for Clunkers bill. The budget needed for the implementation of the package is around $4 billion but it will suffice the need of the program until September 2009. The $1 billion allotment is a portion of the $106 billion spending plan.
The provisions of the bill are almost the same as the requirements it was asking for when it was rejected in the Senate when it was first submitted. The U.S. Senate scrapped the bill for giving much favor for the big three of Detroit compared to the foreign competitors that have local assembly lines.
The Cash for Clunkers proposal still includes the suggestion of giving up to $4500 worth of voucher for consumers exchanging gas-guzzlers for more fuel-efficient vehicles.
In the new scheme, owners of cars that cannot achieve a mileage of 18mpg can opt to trade-in their car for rides which are 4mpg more efficient. This will make them eligible to receive a voucher worth $3500 from the government. A jump to 10mpg more fuel efficiency will make a consumer qualified for the full $4500 voucher.
There will be a different rating for truck owners. The new trucks must be able to have an 18 mpg fuel efficiency and 2mpg better than their old truck. This will get them the $3500 voucher. An improvement of 5mpg will guarantee the full benefit of the program.
60% the cars that are currently donated to charity will now be eligible for a $3500 or $4500 voucher under the cash for clunkers program. Since the tax deduction for donating a car is only $500 or what the car sells charities won’t be able to compete with the program and charitable car donation will end. A better idea is to just change the amount a person can deduct for donating their car back to the book value. That way every car is eligible, the government doesn’t have to spend $4 million of our dollars giving away vouchers and trying to administer a program that is way too convoluted!