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?