This good idea is actually a fourfer (I didn't want to make the headline too long ;) as it will also disproportionately benefit the financially less well off. As reported by the NY Times:
A concept embraced by President Obama on Monday as part his effort to save General Motors and Chrysler from collapse would provide cash to buyers of new fuel-efficient cars — if they traded in a clunker.
Similar incentive programs overseas have lifted automobile sales despite the awful economy. In Germany, an offer of about $3,290 for trade-ins helped to increase February car sales there by 21.5 percent from a year earlier, a 10-year high, according to the German Association of the Automotive Industry.
In the United States, the economic stimulus bill adopted in February provides a tax incentive for the purchase of new cars this year, but Mr. Obama said Monday that he supported lawmakers who wanted to take more aggressive steps, offering not just a rebate on the sales tax, but a large cash incentive for trade-ins.
A bill in the House, sponsored by Representative Betty Sutton of Ohio, would do just that, offering incentives to owners who replace cars built before the 2001 model year. Ms. Sutton’s measure would give those trading in an old car a $4,000 voucher that could be used to buy a new car that was assembled in the United States and has a fuel efficiency rating of 27 miles per gallon. A car assembled elsewhere in North America would have to get 30 miles per gallon to qualify for the $4,000. And cars that are both assembled in the United States and rated at 30 miles per gallon would fetch a $5,000 voucher ...
A similar bill in the Senate would provide slightly less generous subsidies, and is aimed more at protecting the environment than spurring car sales. The Senate measure would offer up to $4,500 for the trade-in of gas guzzlers up to seven years old, $3,000 for cars that are eight to 10 years old and $2,500 for cars older than that. The Senate bill is not limited to cars assembled in North America ...
Limiting the program to cars built or assembled in North America could also draw protests from trading partners, who may contend that the rules violate international trade agreements. Nearly a dozen European countries have adopted programs offering cash to drivers who trade old cars for more energy-efficient models. Those programs are not limited to vehicles manufactured in Europe or any specific country.
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