'Clunkers' Program Low on Cash, Lawmakers May Seek Stimulus Funds
Democrats in Congress are hoping to bring a bill to the House floor today to provide $2 billion to continue the federal government's week-old "cash for clunkers," program, which has proven so popular with consumers that it is almost out of cash.
A congressional source said the money would come from money in the already-passed economic stimulus package that was intended for energy loan guarantees. Congress would seek to replenish the energy program at a later date.
White House press secretary Robert Gibbs said Friday that the program is continuing, even as administration officials work with Congress to find ways to continue funding it. "We're confident we'll have a solution," Gibbs told reporters. "It's something we believe can, should and will be extended."
Gibbs did not say whether stimulus money would be reallocated for the program, which was created to boost stagnant auto sales. He also declined to say how long the program would be continued under the discussions now taking place. Late Thursday, he said that "auto dealers and consumers should have confidence that all valid CARS transactions that have taken place to-date will be honored."
Federal transportation officials called lawmakers Thursday to warn them the program was facing a temporary suspension, congressional sources said, prompting a panic among dealers and a flurry of activity on Capitol Hill.
The House bill was being drafted after Michigan lawmakers held an emergency meeting Friday morning in the office of Sen. Carl Levin. The congressional source involved in the process said it could be considered by the full House under a suspension of the rules, a procedure that would allow the chamber to move the bill quickly but also requires two-thirds support to pass and does not allow amendments. The Senate is not in session until Monday.
"The cash for clunkers program has proven hugely successful in its first week," Levin said in a statement. "We have been told by the White House that people can keep buying cars under the program until further notice. We don't know how long it will last, so people should go to their car dealers now if they want to take advantage of the program. We're also going to seek additional funding to hopefully make the program last longer."
The program, formally known as the Car Allowance Rebate System (CARS), gives vouchers worth up to $4,500 to consumers who trade in gas-guzzling cars for more fuel-efficient models. The highly publicized effort -- passed by Congress in late June to help the flagging U.S. auto industry and launched just a week ago with $1 billion in funds -- was scheduled to run until Nov. 1, or until money ran out.
But as tens of thousands of people rushed to trade in their cars, sources familiar with the discussions who spoke on condition of anonymity said, federal transportation officials worried that the program's coffers could be empty by week's end.
Shortly before 1 a.m. Friday, several local dealers said in interviews that they would wait to see how the government was going to proceed with the program before they accepted any more clunkers. Dealers had been expecting an overwhelming response to the program to continue through the weekend.
Officials say they did not expect the program to run out of cash so quickly. "We're going to try to figure out what's a realistic amount of money and get it into the program," Rep. Mike Rogers (R-Mich.) said Thursday.
The official Web site for the program, Cars.gov, said Thursday night that $779 million remained in its coffers, but it was not clear how much of that money had already been committed. Auto dealers said they've had an overwhelming response from consumers wanting to turn in their clunkers. Under the program, consumers get a voucher for up to $4,500 -- depending on the model and average fuel economy of their car or truck -- if they buy a new car or truck that gets better gas mileage than the one that was scrapped. The payoff grows depending on the difference in the fuel efficiencies of the old and new cars.
Per the program rules, all clunkers turned in must be scrapped. That's why you can't get trade-in money on a C4C car.
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