Late Tuesday night, we reported that the House had passed a bill by Rep. Betty Sutton (D-OH) to institute a "Cash for Clunkers" tax credit scheme.

Now the Detroit News and other sources report that, just two days later, it appears the Senate and House have agreed to include $1 billion to fund the program through September 30. The funding is part of a $106 billion wartime spending bill that's expected to pass next week.

Those provisions will include the same terms as the bill passed by the House. The total cost of the one-year program is expected to be $4 billion, so additional funds will have to be fought over in the future.

IS YOUR CAR ELIGIBLE? Check Edmunds' list of models considered to be clunkers.

"Cash for Clunkers" legislation has had a long and troubled history for what was intended to be an immediate stimulus bill. Green groups wanted to replace gas guzzlers with more fuel efficient vehicles, while automakers and dealers focused on boosting sales to aid struggling automakers.

For a while, the House bill was part of the controversial American Clean Energy and Security Act, which isn't expected to pass any time soon. Then, on Tuesday, the House was able to pass its bill.

Meanwhile, two senators, Debbie Stabenow (D-MI) and Sam Brownback (R-KS), had launched a similar bill in May called the "Drive America Forward Act". But they faced opposition from their Appropriations Committee.

Among the issues were whether funding should come from the $787 billion economic stimulus bill, and a desire for greater gas-mileage improvements for qualifying new vehicles. Senator Diane Feinstein (D-CA) had even introduced a competing bill with higher MPG requirements.

The concept of a clunkers bill is supported by carmakers, the National Auto Dealers Association, most individual dealers, and President Barack Obama. Similar programs in several European countries have boosted vehicle sales from 15 to 30 percent.

The current program would offer electronic vouchers of up to $4,500 to buyers of new cars that get mileage of at least 10 miles per gallon more than the vehicle traded in, which must have been rated at 18 mpg or less. The minimum voucher is $3,500, for a new car that gets at least 22 mpg.

New sport-utilities, pickup trucks, and minivans must get at least 2 mpg more than the tradein--which must also have been rated at 18 mpg or less--to qualify for a $3,500 voucher. The difference must be at least 5 mpg to get the maximum $4,500 voucher.

The vehicles to be traded in must have been made between 1984 and 2001. The bulk of trade-ins, of course, are expected to be those worth less than the amount of the voucher. Dealers must ensure that the vehicles traded in are crushed or shredded.

scrap heap

scrap heap

[Detroit News]