The Car Allowance Rebate System otherwise known as "cash for clunkers" is receiving a $2 billion top-up after the House of Representatives voted overwhelmingly to jump-start the program in a 316-109 vote on Friday. A much needed injection of cash was necessary after CARS had already siphoned off the $1 billion that was budgeted for the program within a week of its launch.
"I want to thank leaders in the House of Representatives for working quickly and in a bipartisan way to pass legislation that will use Recovery Act funds to keep "Cash for Clunkers" going," said President Obama. "The program has proven to be a successful part of our economic recovery and will help lessen our dangerous dependence on foreign oil, while reducing greenhouse gas emissions and improving the quality of the air we breathe. I urge the Senate to act with the American consumers in mind to pass this important legislation."
White House and Transportation officials had been sending mixed messages late in the week as to whether there was any more funding available for the program. The White House said that it was evaluating its options while the DOT was alerting lawmakers that they could suspend the program on Friday due to a lack of funds. .jpg)
The once maligned program provides cash incentives of $3500-$4000 for consumers who trade in older vehicles for new more fuel-efficient models. CARS has proven so successful that an estimated 250 000 cars were sold in its first week.
Therein lay the problem.
As of Wednesday, more than 22,000 documented purchases of new cars and trucks were reported through CARS. But backlogs and delays in reporting from car dealers across the country may see the needle move past 250 000 vehicles sold when the numbers are tabulated.
That high end estimate is a cause for concern as it represented the total funding allocated for the program. That concern had transportation officials calling for a suspension of the program until all the data was in.
It was thought that the $1 billion stimulus package would last through to November. Politicians, caught off guard by the success of the program, did not expect the cupboard to be bare within a week.
Rep. Candice Miller, R-Mich., in a letter to House leaders on Wednesday, requested additional funding for the program. "This is simply the most stimulative $1 billion the federal government has spent during the entire economic downturn," Miller said Thursday. "The federal government must come up with more money, immediately, to keep this program going."
Analysts say that the $1 billion package produced $4 billion in sales and picked up the moribund American auto industry reeling from its worst sales slump in more than 25 years. New car and truck sales were down 35 percent from this time last year before CARS came into effect this week.
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