Is 'cash for clunkers' a practical program?

The idea of a new car with better gas mileage appeals to Carlos Valdez, but he's got a small problem: he can't afford it.

The 37-year-old West Valley City resident wants to sell or trade his 1992 Chevy 1500 that runs at 18 mpg for a new vehicle with better gas mileage. And like many Utahns, Valdez has heard about the federal "Cash for Clunkers" legislation that offers refunds for people willing to trade in their gas-guzzling clunker vehicles for new, economical ones, but even with the up-to $4,500 rebate, a new car is out of his price range.

"I have a lot of bills to pay," said Valdez, who recently moved from California. "The truck takes a lot of gas. I don't need a truck; I need a smaller car. But I can't pay for a new car."

For plenty of Utahns, adding a monthly car payment during a recession, when prices on everything from diapers to blue jeans are going up, is a luxury they can't afford.

With the U.S. Department of Transportation's Car Allowance Rebate System, or "cash for clunkers" program, people can trade in a registered vehicle that has been in use for at least a year with an average mpg less than 18 for a refund and new car. And for people with an old, beat-up vehicle that consumes gasoline by the mile, receiving a $3,500 government credit after purchasing a new vehicle that gets 4 mpg more than the last, and $4,500 for one that gets 10 mpg more, the program will help them save some money.

The program, which was given an initial $1 billion budget and expected to last until November, nearly ran out of money in less than a week. On Monday, the Obama administration asked the Senate to approve another $2 billion for the program to keep it afloat. Senate leaders expect the bill to pass.

Proponents of the bill point out that the program has spurred car sales across the nation — Ford posted its first monthly increase in nearly two years — but some have questioned whether the costs of the initiative outweigh the benefits.

One criticism is that the program leaves out lower-income families who still can't afford a new car even with the rebates, said George Cassity, president of First Class Cars, a Salt Lake dealership. The program also takes older, but still serviceable vehicles, out of commission that people with lower incomes could have purchased. According to the rules of the program, which seeks to take gas-guzzling vehicles off the road, once car dealerships have the clunker, they must drain the oil and pour solvent that locks up the engine. The car is then shipped to facilities to dismantle and sell needed parts.