Cash for Clunkers, out of money already, gets $2 billion more

Posted on July 31, 2009



The government rebate program for trading in older cars for newer ones with better fuel economy, known colloquially as Cash for Clunkers, has already burned through the first $1 billion allocated to it in just the first week of the program. This has prompted the House to hurriedly approve another $2 billion for the program, passing 316-109, with 14 Democrats and 95 Republicans voting against, and 77 Republicans voting with the majority of Democrats to pass the program, which will be taken up in the Senate next week.

Senator Carl Levin (D) of Michigan sounded like a used car dealer himself, saying “people should go to their car dealers now if they want to take advantage of the program.” The only thing missing is Sunday, Sunday, Sunday! The draining of funds might make some see the program as a success, but right now car dealers are frustrated and confused with how to deal with their customers, who aren’t sure how much longer will be able to operate. One feature of the program is that it requires the turned-in cars to be destroyed or else the dealers forfeit their $3,500 rebate. This leaves the car dealers with much less merchandise to possibly turn around and sell at lower prices.

It doesn’t make sense to destroy the old cars’ engines, as the influx of cheaper old cars might help overall car sales, but the government push is to buy new only. And it might be lauded as a momentary jolt to the auto industry, but let’s keep one thing in perspective here – the new cars are being pushed with taxpayer money, money that you and I are on the hook for. It amounts to another bailout of the auto industry, which apparently can’t get enough of government assistance.

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