Deal Struck on 'Cash for Clunkers'

As Part of Climate Bill, Consumers Trading In Cars Would Get Up to $4,500

By STEPHEN POWER and GREG HITT
WASHINGTON -- Consumers would get vouchers for as much as $4,500 from the government to trade in their gas-guzzling cars under a compromise plan that could help advance a broad measure to combat climate change.
The so-called cash-for-clunkers plan could be part of climate-change legislation being pieced together in the House. Rep. Edward Markey (D., Mass.), a co-sponsor of the climate bill, said the auto deal -- forged by Democrats on the Energy and Commerce Committee and endorsed by President Barack Obama -- "demonstrates how representatives from both coasts and the Rust Belt can reach agreement on difficult issues."
The cash-for-clunkers plan would run for one year, offering vouchers to people who trade in vehicles with average city/highway fuel economy of less than 18 miles a gallon to buy a more-efficient new car or light truck. The proposed program would offer the maximum $4,500 voucher for people to use to buy a car that gets at least 10 more mpg or a truck that is at least five mpg more efficient. The program is designed to spur some one million purchases of new cars or trucks to support the ailing auto industry.

Big hurdles remain before passage of the bigger climate measure.
The legislation is mired in disagreements among lawmakers over potential costs to consumers and businesses. Republicans are stepping up attacks on the climate initiative, branding it a "national energy tax." Meanwhile, committee Democrats are haggling privately over details of the proposal to curb greenhouse-gas emissions.
Mr. Obama summoned committee Democrats to the White House to urge them to intensify efforts to agree on a bill ahead of a Memorial Day deadline to ready legislation for House floor action.
"The message of the meeting was, I need everybody on board, and we need to make this happen," said Iowa Rep. Bruce Braley. He added Mr. Obama wanted Democrats to move because health-care reform looms "just around the corner."
Mr. Obama did not dictate specifics, participants said, but made clear he wants a bill that eases the costs imposed on consumers and businesses, creates a predictable set of rules, and addresses concerns that some regions of the country could shoulder disproportionately heavy costs.
"He's giving us a lot of latitude," said Energy and Commerce Chairman Henry Waxman (D., Calif.). "He wants us to move."
Mr. Waxman's bill calls for curbing U.S. emissions by roughly 80% below 2005 levels by mid-century, by placing a cap on overall emissions and forcing companies to hold permits allowing them to emit greenhouse gases. The bill is generally silent on the degree to which companies will have to pay for those permits, and how revenue raised from selling them would be used by the government.
In order to speed the bill along, Mr. Waxman is considering bypassing a key subcommittee on the Energy and Commerce panel and bringing the climate bill directly to the full committee. The chairman had hoped for a subcommittee vote, but winning consensus among subcommittee Democrats has proven difficult. Mr. Waxman said Tuesday that "no final decisions on process have been made," but that he is "consulting with members" of the committee "about the best way forward."
Mr. Obama has called for using the bulk of the money raised by auctioning the permits to fund tax credits for the middle class, but lawmakers from Rust Belt and coal states are pressing him to give some permits to industries in their regions for free.
Rep. Gene Green (D., Texas) said Mr. Obama's message on Tuesday was "work it out, so we can have a broad-based bill that will have Democratic support." Mr. Green is among the lawmakers leaning on Mr. Waxman to give away some permits to ease the impact on businesses, such as the oil and gas refiners in his district.
As recently as March, Mr. Obama emphasized he wanted all greenhouse-gas emissions to be covered by permits that businesses would have to buy. On Tuesday, he signaled he would accept some amount of credits to be given away, said some participants in the meeting.—Jonathan Weisman contributed to this article.
Write to Stephen Power at stephen.power@wsj.com and Greg Hitt at greg.hitt@wsj.com