Federal Government Racing to Give $2 Billion More for Cash for Clunkers

The "cash for clunkers" rebate program, which promises new auto buyers up to $4,500 for fuel-efficiency upgrades as small as 2 miles per gallon, is back to life after burning through $1 billion in taxpayer money.

ago, the House approved $2 billion more in auto rebates by transferring
cash that was already headed for loan guarantees at the Department of
Energy — averting the need to add the new spending to the deficit. The
vote was 316-109.

The last-minute race to keep auto-industry benefits alive, which President Obama is strongly backing,
now moves to the Senate. A bipartisan group there is already
threatening to oppose new "clunkers" money unless its fuel-efficiency
requirements are improved and used cars are approved for purchase

Right now buyers can get
a $3,500 discount on new cars that get as little as 22 mpg. Small truck
buyers are only required to improve 2 mpg to receive the same rebate,
achieving a combined city and highway efficiency of 20 mpg.

early version of the plan would have allowed the rebate value to be
taken in transit coupons, but the DOT said earlier this week that no
such option would be available.

  • Omri

    Oh, for f*ck’s sake, that’s half the amount earmarked to the rail project.

  • “An early version of the plan would have allowed the rebate value to be taken in transit coupons, but the DOT said earlier this week that no such option would be available. ”


  • David Galvan

    This is stimulus money being shifted around. Not new money. Calm down.

  • David: Democratic leaders have promised to replenish the loan guarantee program from which today’s funds were temporarily shifted. It’s likely that deficit spending will ultimately be required.

  • David Galvan

    Ah. Rats.

  • Spokker

    I wasn’t really harping on Cash for Clunkers before, but now it’s getting ridiculous.

  • Spokker

    On a more conservative, car-centric forum I post on, even most of the posters there think this program is awful. If you’re going to subsidize a car purchase, at least raise the bar above 22 mpg. Jesus.

  • James Fujita

    what we have here is an example of a good idea, poorly executed, courtesy of “the art of the possible”.

    I’m a transit advocate, and more specifically a rail transit fan, but I’m moderate enough to recognize that for some people kicking the gasoline habit is going to be a 12-step program. step 1: trade in the Hummer for a Prius, or at least a Honda Civic. okay, so Mr. I Need My Car isn’t turning over a new leaf, but at least he will be polluting a little less and wasting a little less gas.

    the Cash For Clunkers program is way too lenient on the gas mileage.

    the silver lining to all this is, the auto dealer has to disable the clunker. no reselling that SUV to some other sucker once it gets traded in.

    half a loaf is better than two in the bush.

  • David Galvan

    While I would support a higher minimum mpg rating in order to get the subsidy, I should remind everyone that improving your gas mileage is not a linear process, and that it is actually better to upgrade less fuel efficient car by a little bit than a moderately fuel efficient car a lot.

    Hence, the fact that the minimum is 22 mpg means little. If someone is upgrading from a 15 mpg car to a 22 mpg car, they are saving 0.02 gallons per mile. (1 gallon / 15 miles = 0.067 gallons per mile; 1 gallon / 22 miles = 0.045 gallons per mile)

    This is roughly the same amount of gasoline savings one would get if they were upgrading from a 25 mpg car to a 50 mpg Prius. The savings are biggest on the low-mpg-end of things.

    Again, this is a good program, and its benefits (both economically and environmentally) will be immediate. I would love another $2B for the high speed rail initiative, but that is a long term investment. Upgrading our average fuel efficiency is something we should be doing regardless, but this program will help speed that process along.

  • I always thought this was a good idea, but more so for the purpose of getting OLD gas-guzzlers off the street, which are primarily driven by poor folk who can’t afford anything better.

    I need to look into this more, but on the face of it, Congress’ plan looks like a joke of a program, especially if it only goes towards new cars.

    I always envisioned a plan that was primarily targeted at replacing “clunkers” with fuel efficient USED cars. Not too many poor folk who drive old gas guzzlers can afford a new car. A 2004 Honda Civic though (32/39 MPG) would be within reach, and probably run good for the next 10 years at least.

    The folks who can actually afford a 2008/2009 car, have plenty of capability to upgrade their auto and don’t need the rebate. Simply, they’ll save $3-4K if they got the 2006/2007 model of the car instead of the brand new one.

    Nonetheless, within Congress’ plan, folk should at least be required to purchase cars that meet reasonable minimum fuel efficiency standards, regardless of what is being trading in. I don’t care if you’re trading in a Hummer, if the new car doesn’t get a very reasonable 28 MPG these limited funds shouldn’t be available to you. And what they’re trading in should really get horrible MPG, under 20 MPG and should not be luxury vehicles.

  • 72HW

    Yeah – I make a decent living, but cannot afford a new car. I sure do wish this thing was valid for Used cars! I don’t need or want a new car, that would be a huge drain on my checkbook, even with the incentive….

    You load 15 tons, what do you get…

  • Wad

    Why doesn’t CARS apply to fuel-efficient used cars?

    If you’re a cynic, like me, you’d believe it was a bailout for all automakers and the FIRE sector without the stench of Goldman Sachs and cohorts going through the treasury like a casino buffet. CARS is so Average Joe and Jane can get their fingerprints on the crime scene. Automakers don’t get any upside from used car sales. That’s only a secondary market. Automakers also need to justify their factories and parts orders. New cars also cost a little bit to finance and insure, so this helps the FIRE sector get back into the game to allow them to make reckless bets, to wreck our economy again, and repeat the process in a few years.

    If you’re a rational sort, like me when I feel like being one, you would see that stimulating the new car and FIRE sectors also means supporting the jobs that keep the economy going. You’d also realize transit benefits in a small way, as sales taxes (in L.A. County at least) go to keeping buses running and building new rail lines. Also, the government doesn’t open itself up to being a party to lemon law suits or other problems should a person go out and buy a used car that may be fuel-efficient but run poorly. A 2004 Honda Civic as cited above, can get great mileage, but what if it was sold because the owner thought routine maintenance was a ploy by the auto industry to extract even more money? At least with a new car, the owner can break it in and get at least a 3 year/36,000 mile warranty.

  • The absolute insanity of this is just staggering.

    Transit is starving, Amtrak is wheezing, bicyclists and pedestrians lack adequate facilities, yet the government gladly tosses billions and billions to motorists. It’s like a giant Oprah show: “Everyone gets a new car!”

    Worst of all, it appears the environmental advocacy community completely laid down for this. I even got a message from the Sierra Club: “Put Cash for Clunkers to Good Use”:

    Where’s the environmental benefit? The 1,000 gallons or so of energy “embedded” in the manufacture of the existing clunker will be crushed, so the new more fuel efficient consumer can save ~50 gallons a year? Huh?

    Where was the concession? Say a $1 a gallon tax on gas in exchange for this freebie to motorists? And don’t get me started on the social justice inequity of all this (low-income transit riders facing cuts and fare hikes, while middle-class suburbanites buy new Ford Escape Hybrid SUVs.)

    Arrrgggh! I’m just disgusted. Sorry for ranting. If anyone on this list can direct me to useful resources challenging this “Cash for Clunkers” nonsense, I’d appreciate it.


    Paul Dorn
    Sacramento, CA

  • RM

    Typical government program… cash-for-clunkers is already costing THREE TIMES it’s original estimate. Imagine the DISASTER if these politicians attempt healthcare reform.

  • Wad

    RM wrote:
    Imagine the DISASTER if these politicians attempt healthcare reform.

    They are attempting it. Worry about what actually passes or fails.

    Even if it fails, health care will be the next “too big to fail” bubble that will pop. Health care costs are not only exorbitant, but keep rising
    without any means or incentive to control costs.

    If health care reform fails now, it will be inevitable sometime in the near future, possibly as early as this generation. Then we’ll get the health care equivalent of Amtrak.

  • David Galvan

    “Typical government program… cash-for-clunkers is already costing THREE TIMES it’s original estimate.”

    Uh. . . they’re spending 3 times as much on it because it’s far more successful than they’d anticipated. It’s not like we’re getting the original benefit for 3 times the cost. We are getting three times the benefit for three times the cost.

  • David Galvan

    I just heard on NPR news this morning that Feinstein and the other senators who wanted to require that the program rules be tougher have relaxed that demand upon viewing the data from last week, which showed that 80% of participants were turning in SUV’s, and 60% of participants were leaving dealerships with new sedans that get 28 mpg or better. Apparently the hold-out senators are convinced that the program is working to significantly raise the average mpg rating without the tougher requirements.


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