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White House: "Cash For Clunkers" Still Running

More funds being sought for wildly popular program

By Martin H. Bosworth
ConsumerAffairs.com

July 31, 2009

White House economic advisor Christina Romer, interviewed on the business cable network CNBC, said she could confirm that the program remains viable and operating. She said the White House would support Congressional efforts to pump an additional $2 billion into the program.

Car dealers were thrown into a panic late Thursday when it looked like the program had run its course before many dealers got ramped up. National Automobile Dealers Association spokesman Bailey Wood said Thursday that the group had been told by Transportation Department officials of plans to suspend the program after just six days.

But Congressional leaders have said they will propose tripling the number for the program and Romer said the White House supports that effort.

The clunkers program has been the most successful of the economic stimulus progams thus far -- and the one that's most likely to have an immediate effect on Main Street USA, observers noted. Sales of new cars not only pump money into dealers' pockets but also produce big tax proceeds for cash-strapped state and local governments.

The Car Allowances Rebate System -- more popularly known as "Cash For Clunkers" -- where buyers could trade in their old gas-guzzler for a $3,500 or $4,500 voucher towards a more eco-friendly car, was described as suspended last night, and less than a week and roughly 250,000 cars had been sold.

Under the original bill, the funding only covered 250,000 cars, but it was estimated that it would be at least October before than many were sold.

The program certified 22,782 car trades since Monday, according to the National Highway Traffic Safety Administration (NHTSA), but a survey of dealers found that there was a backlog of 25,000 trades still awaiting clearance. The agency also rejected many claims due to illegible or incomplete paperwork, according to theDetroit Free Press.

Many auto dealers around the country were reporting brisk business as a result of the program, while others were claiming the procedure for approval was too difficult and was leaving them unable to make transactions.

Processing the remaining transactions would have drained the program of its remaining funds due to the high demand, sources said. The sources said the Obama administration had suspended the program, though the White House now says that was never the intention.

The program was criticized on a number of fronts, with Republicans and some Democrats claiming the cost would be too high and provide too little stimulation to the economy. Environmental activists claimed the program actually favored purchasing of SUVs and "crossover" vehicles, due to inconsistencies in the Environmental Protection Agency (EPA)'s mileage standards.

And it wasn't long before the program was announced that a proliferation of scam operations appeared, looking to take advantage of the expected flurry of business in the auto market.

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