Friday, July 31, 2009

"Cash for Clunkers" - Economic Stimulus That Works

Jul 30: Less than five days old, the Car Allowance Rebate System (CARS, aka Cash for Clunkers) was supposed to stimulate the buying of about 250,000 new, more fuel-efficient cars and last until November 2009. However, the $1 billion program has become perhaps the most successful economic stimulus effort yet, as the "cash" is nearly gone and auto dealers are warning of limited choices due to shortages in inventory. Under the program consumers receive a $3,500 or $4,500 discount from the car dealer when they trade in their old, low mileage vehicle and purchase or lease a new, more fuel-efficient one.

U.S. Senator Debbie Stabenow (D-MI) issued a statement saying, “It is amazing that ‘Cash for Clunkers’ would be this successful this quickly. Many people talk of the need for a short-term stimulus for the economy. Well, we have found it in the CARS program. With over 200,000 cars sold, thousands of employees on the job serving customers, millions of dollars in advertisement spending, and sales tax income flowing into struggling states, CARS has injected money into communities across America. From Maine to California, from Michigan to Texas the impact is dynamic. It took a lot of hard work to get the votes to pass this program into law, so I am grateful that consumers love it.

"I am delighted to hear dealers say that all of their salespeople are busy and they are selling more cars in a day than they had been selling in a month. That is terrific news and I hope the sales continue even though the initial funding for the CARS program has been suspended. This program has helped bring people back to showrooms to see what incredible cars and trucks we make in this country. I urge Congress and the Administration to provide additional funding so that ‘Cash for Clunkers’ may continue under its original authorization until November."

On July 27, the Alliance of Automobile Manufacturers (Alliance) joined Department of Transportation (DOT) Secretary Ray LaHood and other auto industry representatives to officially launch the “Cash for Clunkers” program. The Alliance worked with DOT to ensure what they hoped would be a "successful implementation of the program." Alliance President and CEO Dave McCurdy said, "The 250,000 vehicles this program is designed to sell will be a needed to boost to the entire industry. Automakers will continue working with DOT and Congress to meet the goals of stimulating vehicle sales, reducing greenhouse gas emissions from autos and enhancing energy security.”

A "funding available meter" on the CARS website which still indicated substantial funding available earlier today (July 30), was taken down by 9:30 AM ET. Friday morning, the White House reportedly indicated that it would assure that the CARS program operates through this weekend and would attempt to find funds to continue the program.

On July 31, U.S. Senators Dianne Feinstein (D-CA) and Susan Collins (R-ME) urged the Department of Transportation (DOT) to promptly provide Congress with a detailed evaluation of the effectiveness of the CARS program. In a letter to Transportation Secretary Ray LaHood the Senators renewed their request for a detailed analysis of how the program has worked to date, including the make and model of the vehicles purchased, the fuel efficiency of purchased vehicles, and the condition of vehicles traded-in. The two Senators along with Senator Charles Schumer (D-NY) and Thomas Carper (D-DE), previously authored an alternative “Cash for Clunkers” proposal that they say would have achieved 32 to 38 percent greater oil savings and emissions reductions than the enacted “CARS” program. The Senators have said that any extension of the program must adhere to higher fuel efficiency and greater emissions reductions.

Senator Carl Levin (D-MI) issued a brief statement mid-day on July 31, saying, “The cash for clunkers program has proven hugely successful in its first week. 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.”

In unprecedented fashion, the House voted 316 to 109 this afternoon (1:24 PM, July 31) to extend the program with an additional $2 billion in funding. The funding authorization is included in H.R. 3435, a bill to provide supplemental appropriations for fiscal year 2009 for the Consumer Assistance to Recycle and Save Program. The Senate will not take up the bill until next week, but it is not without controversy. Fox News is reporting that Senator John McCain (R-AZ) "will oppose any move to take up the House bill." McCain told Fox earlier today, "I not only wouldn't vote for the extra two billion, I was opposed to the initial billion." McCain, reportedly said, "I can't imagine that any taxpayer of America would have thought that the TARP, the financial recovery money, would be used now to subsidize the sale of automobiles in America."

Access a release from Senator Stabenow (
click here). Access a 7/27 release from the Alliance (click here). Access the CARS website for additional information (click here). Access a release and the DOT letter from the two Senators (click here); and another release (click here). Access a release from Senator Levin (click here). Access a lengthy release from House Speaker Nancy Pelosi with videos of floor speeches and links to additional information including the roll call vote (click here). Access the Fox News report (click here).