Why aren't cars that no longer get the MPG they did when new eligible for Cash for Clunkers program?
Because it would be impossible to administer a program like that.
You'd either have to take people's word for the decreased mileage - in which case any car brought forward for the program would qualify, or have expensive testing to determine the mileage that the vehicle was actually capable of achieving.
They decided to use an objective methodology that was already available to them under which every car in the United States has already been tested - the EPA ratings.
Congress could have designed the program so that any old car would qualify (without anyone having to lie) but they chose not to.
Sorry, and I understand your feelings, but the rules of the program are what they are, not what they might have been.