Guest Blogged by DES
As we related in yesterday's 'Green News Report,' the federal auto-stimulus program Car Allowance Rebate System (CARS) --- popularly nicknamed 'Cash for Clunkers' --- launched this week in earnest. The program is intended to help spur consumers to trade in old gas guzzlers with a virtual cash rebate of up to $4500, in exchange for purchasing a car, truck, or SUV with better (even just slightly better) mileage. After compromising on an initially proposed $4 billion program, Congress approved $1 billion in funding for the program, to be paid directly to car dealers, with a deadline of November 1st to file the paperwork.
Well, not long after airtime yesterday, and just four days after the program began in full, 'Cash for Clunkers' appears to have been so wildly popular that it had already run out of money.
According to the New York Times, the Transportation Department had asked car dealers around the country to stop offering the rebate program while officials determine the next course of action. By late this morning, however, they report, the White House has issued a statement that the program will continue at least through this weekend. "There's apparently too many clunkers and not enough cash," the Times' Richard Change notes.
As of yesterday, White House Press Secretary Robert Gibbs had said the program was not suspended, as had initially been reported, and that the administration was "assessing the situation." He added, "all valid CARS transactions that have taken place to date will be honored." Secretary of Transportation Ray LaHood is said to be working with Congress to discuss ways to increase funding to extend the wildly popular program.
With the rebates ranging from $3,500 to $4,500 --- dependent on the miles per gallon of the trade-in compared to the new car purchased --- the $1 billion in funding was intended to cover about 250,000 new cars. Dealers have been collecting applications for the rebates since July 1st, in advance of the publication of the final rules and qualifying vehicles on Monday. Although the Department of Transportation reports a backlog of applications waiting to be processed, they reported they had already received approximately a quarter million applications as of Thursday night.
UPDATE: The U.S. House passed a bill late Friday to provide an additional $2 billion in funding for the CARS program, by diverting funds from a Department of Energy loan guarantee program. The Senate is expected to act next week, although CNN.com reports the "bill will face tough opposition in the Senate."