‘Cash for Clunkers’ Out of Cash — But Not Quite Finished

The U.S. DOT may have notified car dealers last night that its watered-down
"cash for clunkers" plan was already out of cash, but that doesn’t mean
the rebates are on their last legs. With the White House vowing to protect the program, Congress soon could have to decide whether to keep the good times rolling for auto companies.

ap_gma_cash_clunkers_090731_mn.jpg(Photo: AP)

Lawmakers
approved an initial $1 billion in June to offer taxpayer-subsidized
credits of $3,500 and $4,500 to new car and truck buyers, reportedly
prompting dealers to begin assuming backlogs of "clunker" rebates that
were abruptly cashed in when the program formally began this week.

That
rush to capitalize on the "clunkers" deal has led Democrats as well as
many in the media to frame the program as, essentially, a victim of its
own success.

Rep. Ed Markey (D-MA), co-author of this
Congress’ landmark climate change bill, said in a statement that he
hopes to spur a million car trade-ins: "Cash for Clunkers may have run
out of cash, but America’s
consumers haven’t run out of clunkers."

Sen. Charles
Schumer (D-NY) echoed Markey’s call to keep the program alive, calling
it "maybe even too successful." He suggested giving the rebates "a
tuneup so that we get the most stimulus, conservation, and efficiency
for the buck."

Indeed, the question this morning may not be whether the program gets more money but if environmentally-minded lawmakers heed the warnings of conservation groups and insist on greater fuel-efficiency improvements in order to qualify car buyers for the deal.

Sens.
Dianne Feinstein (D-CA) and Susan Collins (R-ME), who joined Schumer on
a rival "clunkers" bill that would have set stricter fuel standards,
announced last night that they would only support a stronger version of
the program:

We
believe that any extension of the ‘Cash for Clunkers’ program must go
further in advancing the goals of better fuel efficiency and greater
emissions reductions. We will not support any bill that does not meet
these goals.

We
will insist than any extension of the program requires that the minimum
fuel economy improvement for newly purchased vehicles be at least two
miles per gallon higher than it is under the enacted Clunkers program.
It is also important to include lower-income consumers who are
disadvantaged under the current program. So, we would also include a
voucher for the purchase of fuel efficient used vehicles.

Collins and Feinstein are likely to face resistance from lawmakers from
auto-producing states such as Michigan and Ohio, who won looser rules
to help resuscitate their local industry and moved environmental
concerns to the back seat.

One
thing is certain: With the House set to depart this weekend for a
month-long recess, prospects of reaching an agreement on more cash for
the program appear slim. But Congress and the White House have proven
themselves willing to go the extra mile to help automakers — so
lawmakers may still pad car buyers’ pockets before leaving town.

  • David Galvan

    What a success! Pretty funny how, just a few days ago, this very blog was touting the Edmunds report that said only 50,000 new sales would result from this program over the entire period, which was expected to last to early November, a period of roughly 3 months.

    Now, 5 days after the program started, check this AP report:

    “The program was scheduled to last through Nov. 1 or until the money ran out, but few predicted the fund would run out so quickly. The $1 billion in funding would provide up to 250,000 new car sales.
    It was unclear how many cars had been sold under the program. Sen. Debbie Stabenow, D-Mich., said about 40,000 vehicle sales had been completed through the program but dealers estimated they were trying to complete transactions on another 200,000 vehicles, putting the amount of remaining funding in doubt.”

    (from: http://tinyurl.com/nwqasu)

    Do the people here still think this program is bound for failure? The net result of this will be boosting the economy and increasing the fuel efficiency of the American motorist. Good things.

    I do agree with Feinstein’s statement about strengthening the program in the next iteration. There is clearly a demand that is getting people to move on this, might as well improve on the benefits.

  • M

    I didn’t think it was necessarily bound for failure, but I also didn’t and still don’t see it as the golden key to fixing our environmental, energy or transportation issues.

  • Any reauthorization should allow for exchanging a fuel-inefficient vehicle for transit vouchers of some sort. The public transportation sector needs stimulus just as the automotive industry, and the environmental benefits would be far greater. If Feinstein manages to push that into the reauthorization, I might actually vote for her next time she’s up for election (I generally abstain when she’s involved).

  • David Galvan

    @M: I’d love to hear what single program you WOULD think would be the “golden key to fixing our environmental, energy, or transportation issues.” No one program is a cure-all. But this helps, and I was surprised to see so many commenters here implying that it wouldn’t.

    The CARS program has the benefits of stimulating the economy, raising the a fuel efficiency of the average american motorist, and, (oh yeah), it is actually happening right now. Can anyone name another program that would do all those things, and is actually being carried out right now?

    This is a winner. Not to say it can’t be improved. I agree that including transit vouchers would be a good idea, but I don’t think it will happen because of the logistical implications. (IE: how do you give people all over the country a transit voucher that will work with their local public transit system? A TAP card for L.A.? A magnetic stripe card for Chicago? or will people just have to save their ticket stubs and apply to the fed for a rebate?) I’d love it if they found a way to do this, but I suspect it will scare off congressmen for supporting it. Hope I’m wrong though.

  • Some sort of voucher shouldn’t be too difficult. It’s not as if paying a heterogenous collection of transit agencies is all that different from paying a heterogenous collection of auto dealerships. The main problem is that transit agencies generally wouldn’t be able to handle the traded in cars directly as the dealers would, so the process would have to be use car dealerships, waste management facilities, etc. as proxies.

  • Let’s please, David Galvan, not talk about “what would fix our environmental, blah blah blah”. I think any regular reader of this blog could quickly list off several significant programs to improve things in this country.

    This program has everything to do with propping up the worst in our economy: extractive industries that move both capital and useful material into corporate hands; and, oil-based consumption of resources.

    Yes, it is about “jobs” – but jobs that are part of a dying model of unsustainable, allegedly eternal, growth.

    Does anyone else get the feeling that we’re on Easter Island and someone just cut down the last big tree?

  • David Galvan

    This is surreal.

    So you really think that people should NOT be increasing their fuel efficiency? You think it would be better if people kept their gas guzzlers and made no effort to upgrade to a higher mpg car? You really see no benefit to using lass gasoline per mile driven?

    Come on, now.

  • David Galvan

    “Let’s please, David Galvan, not talk about “what would fix our environmental, blah blah blah”. I think any regular reader of this blog could quickly list off several significant programs to improve things in this country.”

    Go ahead then, and list one that is actually happening right now, and that will actualy improve the fuel efficiency of the average american. (Hint: convincing everyone to give up their car and buy a bike instead is not actually happening right now.)

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