Is “Cash for Clunkers” Already Busted?

Aug 03, 2009
Last month, Congress approved “Cash for Clunkers,” a program designed to take gas-guzzling older cars off of America¹s roadways by exchanging old vehicles for cash toward the purchase of a new vehicle.  Overwhelming response to the Car Allowance Rebate System, or CARS, has already stripped the program of its entire $1 billion dollar budget.

The US Transportation Department, has already called for a suspension of the program to quell demand, but the White House has yet to comply.  Press Secretary Robert Gibbs said regarding the issue, “We are working tonight to assess the situation facing what is obviously an incredibly popular program, auto dealers and consumers should have confidence that all valid CARS transactions that have taken place to date will be honored.”

Lawmakers are doing everything they can to pump more money into the CARS program.  23,000 auto dealers are currently participating in the program, and the sales-stimulating effects of CARS are already surpassing the program¹s limitations. “There’s a significant backlog of “cash for clunkers” deals that make us question how much funding is still available in the program,” said Bailey Wood, a spokesman for the National Automobile Dealers Association.

CARS serves not only to raise the number of more efficient cars on the road, but has also been vital in stimulating the auto industry. Sales are the lowest they have been in over 25 years, down over 35 percent from this time in 2008.

“This is simply the most stimulative $1 billion the federal government has spent during the entire economic downturn,” said Rep. Candice Miller, R-Mich. “The federal government must come up with more money, immediately, to keep this program going.”

For fleet owners, now may be the last chance to take advantage of the benefits offered by the CARS program. Automakers are hopeful that the program will find new funding, but it is not yet guaranteed. General Motors Co. spokesman Greg Martin said his company hopes “there’s a will and way to keep the CARS program going a little bit longer.”