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Archive for Friday, July 31, 2009

White House reviewing options for ‘cash for clunkers’ funding

July 31, 2009

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— The White House said Thursday it was reviewing what has turned out to be a wildly popular “cash for clunkers” program amid concerns the $1 billion budget for rebates for new auto purchases may have been exhausted in only a week.

Transportation Department officials called lawmakers’ offices earlier Thursday to alert them of plans to suspend the program as early as today. But a White House official said later the program had not been suspended and officials there were assessing their options.

“We are working tonight to assess the situation facing what is obviously an incredibly popular program,” White House press secretary Robert Gibbs said of the Car Allowance Rebate System. “Auto dealers and consumers should have confidence that all valid CARS transactions that have taken place to date will be honored.”

Gibbs said the administration was “evaluating all options” to keep the program funded.

A Transportation Department official said the department was working with Congress and the White House to keep the program going. The administration officials spoke on condition of anonymity because they were not authorized to speak publicly about the discussions.

The CARS program offers owners of old cars and trucks $3,500 or $4,500 toward a new, more fuel-efficient vehicle.

Congress last month approved the program to boost auto sales and remove some inefficient cars and trucks from the roads. The program kicked off last Friday and was heavily publicized by car companies and auto dealers.

Through late Wednesday, 22,782 vehicles had been purchased through the program and nearly $96 million had been spent. But dealers raised concerns about large backlogs in the processing of the deals in the government system, prompting talk of a possible suspension.

A survey of 2,000 dealers by the National Automobile Dealers Association found about 25,000 deals had not yet been approved by NHTSA, or nearly 13 trades per store. It raised concerns that with about 23,000 dealers taking part in the program, auto dealers may already have surpassed the 250,000 vehicle sales funded by the $1 billion program.

“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 dealers association.

Alan Helfman, general manager of River Oaks Chrysler Jeep in Houston, said he was worried that the government wouldn’t pay for some of the clunker deals his dealership has signed because they aren’t far enough along in the process.

His dealership has done paperwork on about 20 sales under the clunker program, but in some cases the titles haven’t been obtained yet or the vehicles aren’t yet on his lot.

“There’s no doubt I’m going to get hammered on a deal or two,” Helfman said.

The clunkers program was set up to boost U.S. auto sales and help struggling automakers through the worst sales slump in more than a quarter-century. Sales for the first half of the year were down 35 percent from the same period in 2008, and analysts are predicting only a modest recovery during the second half of the year.

Comments

toe 4 years, 8 months ago

Waste of what is now play money. The government is borrowing this money to give away on a depreciating asset. But, everyone, including those who would never use the program, are going to be making interest and principal payments on the debt long after these cars are in the junk yard. What a ridiculous nation we have become.

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jaywalker 4 years, 8 months ago

Sigmund, ya cracked me up!

"So, if they buy something that saves them $100 in gas/month..."

Riiight. Keep telling yourself that. Less gas purchased means fewer tax dollars hoarded which means Unca Sam will be implementing another way to get at that $100.....say like, taxing mileage?

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Sigmund 4 years, 8 months ago

I think they should be forced to take end of life counselling and helped to realize that really only the younger cars with fewer miles and less maintenance costs .... Oh wait, that was something else, reducing Health Care costs. Never mind.

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dandelion 4 years, 8 months ago

So, if they buy something that saves them $100 in gas/month, but they are still paying a loan. Hmmm. make a local bank rich or make the arabs rich? Not a problem to me. I'll pick the bank, thanks.

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Practicality 4 years, 8 months ago

I think that the government shouldn't stop with cars. The next measure needed is to give money for houses. If your house is worth less than $150000 then you should be able to get an upgrade voucher worth $250000 on the purchase of a new home worth $500000 or more. This will revitalize the housing market.

(Sarcasm Intended)

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SettingTheRecordStraight 4 years, 8 months ago

And 98% of buyers will finance their new cars, further burdening American families with debt.

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dandelion 4 years, 8 months ago

If a popular (successful) website is inundated with hits, it slows the site down or even shuts it down temporarily. This program has been so successful, that they will have to slow or shut it down to make sure they haven't gone to far over the billion dollars. But right wingers are crying failure? Are you all that heavily invested in oil and love the Middle East sooo much, you can't stand the thought of more fuel efficient cars running around? Or are you just mad, because you didn't get your gas guzzler traded fast enough?

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