Rep. Betty Sutton (D-Ohio) speaks about clunker cars during a news conference in April. | John Shinkle/POLITICO Cash-for-clunkers deal moves ahead

A controversial auto bill that would reward consumers with tax credits for trading in their old cars and buying more-fuel-efficient ones passed the House on Tuesday, inching closer to becoming law.

The “cash for clunkers” proposal, which would give consumers a tax credit of up to $4,500 for switching from their gas guzzlers, has been under consideration for months by lawmakers trying to strike a balance between giving an economic boost to struggling auto companies and promoting their environmental goals.


Auto manufacturers argue that the bill is critical to stimulating lagging car sales and saving jobs at dealerships, automakers and parts manufacturers. Despite billions in government aid to shore up the nation’s car industry, U.S. auto sales dropped 34 percent last month compared with May 2008, according to industry analysts. China, Japan, England, Germany and several other countries have already passed fleet modernization bills.

“The U.S. is already well behind other major economies in adopting a fleet modernization program, and many buyers are now delaying purchase decisions until the Congress acts,” Dave McCurdy, president of the Auto Alliance, a group of 11 vehicle manufacturers, wrote in a letter to House Speaker Nancy Pelosi. “We strongly urge the Congress to send a message to American car buyers by sending a bill to the president’s desk without delay.”

But environmentalists say the legislation is not tough enough and should require more serious reductions in greenhouse gas emissions. Under the House bill, introduced by Rep. Betty Sutton (D-Ohio), car owners would receive a $3,500 voucher for switching to a vehicle with just 4 miles per gallon better mileage — trading an old vehicle getting as much as 18 mpg for a new one with 22 mpg. If the mileage of the new car getsat least 10 more miles per gallon than the old one, the voucher would be worth $4,500.

Owners of light trucks or SUVs with gas mileage of at least 18 mpg are eligible for $3,500 vouchers if the new vehicle gets at least 2 more miles per gallon than the old one.

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“The House deal really undercut the possibility of ensuring that taxpayer dollars go to subsidizing the most efficient vehicles out there,” said Ann Mesnikoff, director of the Green Transportation Campaign at the Sierra Club. “Subsidizing vehicles that are nominally better doesn’t make a lot of sense.”

The bill was pushed along by President Barack Obama, who helped broker a deal that included a compromise version of Sutton’s proposal in the climate legislation that passed the Energy and Commerce Committee in May. It is now a stand-alone bill scheduled for floor time this week.

Sen. Debbie Stabenow (D-Mich.) has introduced a similar version of the legislation in the Senate. The voucher would be redeemable for a year, and traded-in vehicles would be recycled, giving an additional economic boost to auto parts resellers and recyclers.

A group of senators, led by California Democrat Dianne Feinstein, is backing an alternative proposal that imposes tougher mileage limits on the trade-in program. Feinstein’s bill mandates that the old vehicle must get 17 mpg or less, and new passenger cars with at least 24 mpg are eligible for vouchers. To receive the full $4,500 voucher, the new vehicle must get at least 13 miles to the gallon more than the old car.

“Just a 2-mile change in each of the categories achieves 32 to 38 percent greater savings in gasoline, in oil and in global warming gases not going into the atmosphere,” Feinstein said Monday.

But in a nod to the power of the auto industry, Feinstein said her proposal was unlikely to become the primary legislative vehicle in the Senate. “I could make an amendment in the conference committee, but I wouldn’t win,” she said.

Senate appropriators are also debating providing $1 billion in a supplemental war funding bill for the cash-for-clunkers program. But the one-year program is expected to cost $4 billion, so lawmakers would have to find additional funds.

Chamber of Commerce, NAM Rebuked For Opposition to Climate Change Bill

An alliance of 14 organizations that support climate change legislation has sent letters to companies that are members of the U.S. Chamber of Commerce and the National Association of Manufacturers, urging them to demand a refund of any dues being used by the two groups to oppose a cap-and-trade system to regulate greenhouse gas emissions.

The letter urges companies to ask the Chamber and the NAM, which oppose climate legislation currently moving through the House, to return the portion of their dues that fund the pair’s climate and energy lobbying activities.

The letter from the alliance, led by the Center for Political Accountability, explains that the refund is “essential to assure that the company is not funding its opponents and undermining its interests through its trade association payments.”

The letter was sent to 26 companies, including Xerox, Ford Motor Co., Alcoa, IBM and General Electric.

The Center for Political Accountability says it has received positive responses from Air Products and Chemicals, American Electric Power and Dow Chemical and is in the process of following up with those companies.

The Chamber of Commerce already is taking heat from several corporate members over its opposition to the global warming legislation.

Last month, Johnson & Johnson sent a letter to the Chamber asking the organization to refrain from making comments on climate change unless they “reflect the full range of views, especially those of Chamber members advocating for congressional action.”