The Government in the Driver's Seat - Cash for Clunkers Bill

It looks like Congress has been able to come together enough to at least write up new “cash for clunkers” legislation. Passing it, however, might be another story.

Part of the problem is that critics, both within and outside of the government, have a way of forgetting that President Obama wants to do more than get the U.S. automakers to radically restructure for success. He wants consumers to do the same thing.

That is, he has made it perfectly clear that he wants auto buyers to change their buying behavior just as radically and start purchasing more fuel-efficient vehicles. And what that means is that any efforts to goose the U.S. auto market must do more than get people buying cars and trucks — they need to get people buying the “right” kinds of cars and trucks. It’s not going to help things if people trade in their old heaps just to buy a Ford F-150 or a Toyota Land Cruiser.

As far as numbers, sources are saying legislation provides for vouchers that will only be good on vehicles that get at least 22 mpg — but I haven’t seen anything that indicates whether this is a city rating (which would have a huge impact), a highway rating (not quite so much — a Nissan Pathfinder, for example, would qualify, although just barely) or the combined cycle (I’m too lazy to look these up).

At a minimum, though, this would cross the vast majority of full-size trucks off the list. Among the monsters out there, only the General Motors two-mode hybrids (GMC Yukon/Sierra and Chevrolet Silverado/Tahoe) achieve 22 mpg highway. If the level is set at 22 mpg city, you can forget about cars like the non-hybrid Ford Fusion, the Honda Accord (unless you get the manual transmission), the Toyota Camry and even the Scion tC (pictured).

Overall, for better or worse, this is another example of how far the auto industry is from the free market — and another reason not to worry about imposing free-market-type restrictions on helping the auto companies.

In fact, with so many countries passing out money to their homegrown automakers, the only way to keep things “fair” from a global perspective is to do the same thing for ours. Of course, the U.S. clunker bill would go beyond this by allowing the vouchers to be used for purchases from foreign OEMs, too, including Toyota, Honda and Nissan, and even I have concerns over this.

But here’s my biggest problem with the clunker law: It’s actually attached to the controversial climate-change legislation that stuck in a morass of arguments over carbon dioxide and greenhouse gas emissions. And if that can’t be sorted out before the Memorial Day Congressional break, it’s likely to be yet more months before anything happens on the clunker front.

And more months like March and April aren’t going to help anyone in the auto industry.