Friday, July 31, 2009
Cash for clunkers hits bump in the road
The Car Allowance Rebate System otherwise known as "cash for clunkers" may have already siphoned off the $1 billion that was budgeted for the program within a week of its launch.
White House and Transportation officials were sending mixed messages as to whether there was any more funding available for the program. The White House said that it was evaluating its option while the DOT was alerting lawmakers that they could suspend the program on Friday due to a lack of funds.
The much maligned program provides cash incentives of $3500-$4000 for consumers who trade in older vehicles for new more fuel-efficient models. CARS has proven so successful that an estimated 250 000 cars were sold in its first week.
Therein lies the problem.
As of Wednesday, more than 22,000 documented purchases of new cars and trucks were reported through CARS. But backlogs and delays in reporting from car dealers across the country may see the needle move past 250 000 vehicles sold when the numbers are tabulated.
That high end estimate is a cause for concern as it would represent the total funding allocated for the program. That concern has transportation officials calling for a suspension of the program until all the data is in.
It was thought that the stimulus package would last through to November or whenever the $1 billion was doled out. Politicians, caught off guard by the success of the program, did not expect the cupboard to be bare within a week.
Rep. Candice Miller, R-Mich., in a letter to House leaders on Wednesday, requested additional funding for the program. "This is simply the most stimulative $1 billion the federal government has spent during the entire economic downturn," Miller said Thursday. "The federal government must come up with more money, immediately, to keep this program going."
The CARS program is seen as a measure to prop up the ailing auto industry while providing environmental benefits through improved fuel economy. The car industry is reeling from its worst sales slump in more than 25 years. New car and truck sales are down 35 percent from this time last year.