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Cash Register Closing on Clunkers

Posted by Larry Doyle on August 19, 2009 2:17 PM |

The Wall Street Journal is reporting that the Cash for Clunkers program is soon winding down. It highlights this development in writing, White House Will Outline Plan to End ‘Cash for Clunkers.’

The Obama administration will release a plan this week to wind down its “cash for clunkers” incentive program, signaling that one of Washington’s fastest-acting stimulus programs is nearing an end.

Transportation Secretary Ray LaHood said Wednesday he would disclose within two days updated figures on the program, including how much of the $3 billion in funding was left. He said he would also offer a blueprint for how the administration will wind down the program to ensure all vouchers issued by dealers are reimbursed by the government before the money runs out.

“They’re going to get their money,” Mr. LaHood said, responding to dealers’ complaints of payment delays. “There will be no car dealer that won’t be reimbursed.”

He said the government has “more than 1,000 people processing paper 24-7,” to speed payments to dealers, and continues to add workers.

Mr. LaHood previously said that he expected the program to last through Labor Day, Sept. 7. He declined to say Wednesday whether he still expected the program’s budget to last that long.

The program, formally called the Car Allowance Rebate System, offers government vouchers worth either $3,500 or $4,500 to consumers who agree to scrap cars or trucks with fuel economy ratings of 18 miles per gallon or less. The vouchers can be used to purchase new cars or light trucks with an average 22 miles per gallon or more.

Demand for the vouchers swamped the program soon after it launched in late July. Congress originally budgeted $1 billion for the program, which had been set to last through Nov. 1, but the heavy demand depleted the funds much more rapidly. Lawmakers in early August rushed to add $2 billion to its funding.

Dealers have complained that the government wasn’t moving quickly enough to reimburse discounts given to customers under the program, putting some dealers at risk for hundreds of thousands of dollars should the federal funds not come through.

The cash-for-clunkers program has helped to revive U.S. demand for autos after the market saw one of its worst collapses in decades. Some major auto makers competing in the U.S., including Toyota Motor Corp., General Motors Co., Ford Motor Co. and Chrysler LLC have said they will increase production to restock dealer lots depleted by the cash-for-clunkers sales run.
Auto makers remain cautious about what will happen when the federal subsidies run out. In the past, and in other markets around the world, the end of such subsidies has led to another downturn in sales.

If in fact this program has merely pulled demand forward and redirected personal consumption toward new car sales from elsewhere, what has truly been accomplished?


  • Aaron Kramer

    This program has only pulled demand forward as it has in every other country with a similar program. Now producers are rehiring people only to lay them off when future demand falls off. What amazes me about how the O Administration has botched the rebate processing, is not it has been botched but rather that the media is not reporting it. Does anyone remember when the government began forcing Americans to carry passports when vacationing in Canada and Mexico? The State Department couldn’t keep up with the applications and the media was just railing against the administration for weeks. I’m not defending the government in the passport case but I am troubled that nothing is said about the rebates as we debate government control over health care economy.

  • Larry Doyle

    Aaron….great point. I have heard of a number of dealers in and around New York who have backed out of this program given the government’s inability to process paperwork properly and efficiently.

  • LD,
    Did you see this example of the latest DC shell game?

    • Larry Doyle

      Well, GM is the government so it is ultimately one arm of the govt covering for another.

  • Randy Bowman

    This wasn’t about stimulating the economy at all. It was simply Obama putting lipstick on a pig in favor of the autoworkers union that helped elect well as an indirect way to once again stream support money into GM.

    Our elected representatives may seem dim-witted at times but I think it is far less a lack of smarts and far more simply an agenda that has nothing to do the wants and desires of the American public and nearly everything to do with returning corporate favors and greasing the palms of those entities who have the strongest lobbies. We should have done away with both unions and lobbyists in this country at least 30 years ago and most people with any sense of economics and the rules of fair play have known that all along.

    Auto sales will decline to lower than pre-stimulus levels and the government will have succeeded once again in increasing our already disastrous levels of debt with little to no added benefit.

    Meanwhile, GM can then focus on using U.S. taxpayer monies to manufacture their planned new $4,000 cars in foreign countries, thus helping to stimulate their economies and employment rates instead of ours.

    The American citizenry are still quite obviously asleep at the switch as the government continues to steal our freedoms and prosperity out from under our very noses.

  • Larry Doyle

    Randy….very strong and well said. I do not disagree with you.

  • Good…, as they say, all good things come to an end. Actually, this could be considered a BAD thing b/c it’s CRAZY, we are giving people money to live more vicariously and lavishly than before all this economical bust took place? What are we doing? Spoiling every single last American? Let’s learn to live in moderation, then we wouldn’t have so much debt…Well, the fish sticks from the the head is the While House…right?

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