‘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.

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