[social_buttons] You can’t turn on the TV and avoid the ads for the dealers promoting the Cash for Clunkers program. Experts predicted that the money would last at least two to three weeks, but alas, it is not so. The LA Times is reporting that in less than one week, the $1 billion dollars for the program is already gone and the government is scrambling to find more money to keep the program going. Worst case, I suppose they can just write “IOUs” like the state of California is doing and according to Governor Schwarzenegger, may be bailing out the federal government some day.
“We are working tonight to asses the situation facing what is obviously an incredibly popular program,” the White House told the LA Times. “Auto dealers and consumers should have confidence that all valid CARS transactions that have taken place to date will be honored.”
However, there may be no need for this as earlier this afternoon, the Associated Press reported that house “is rushing” to infuse $2 billion more into the program. Members of the House are anticipating that a vote could take place yet today, and they are speculating that the additional monies could come from the $787 billion economic stimulus bill. Should the House pass the approval today, then it is expected that the Senate would pass it next week.
But with all the flurry of activity like building new roads and runways at airports – both of which will be used less and less and the price of gas gets higher and higher — as well as all the money being put into alternative energy such as advanced biofuels like algae, plug-in electric vehicles, and hydrogen, you have to wonder if they haven’t overspent already.
Regardless, the program, actually called CARS or Car Allowance Rebate System was designed to run until November 1, 2009 or until 250,000 cars has sold. Buyers would be given either $3,500 or $4,500 for their trade in vehicle if it got less than 18 miles per gallon. The total rebate is ultimately determined based on how fuel efficient the new car is. In addition the buyer will receive a few extra dollars earned when the car is scrapped (all cars turned in as part of this program will be destroyed).
It is reported that the program has already paid out $150 million to car dealers with another $850 million appropriated for pending applications. For the past year, cars sales had been in the toilet, and now some dealerships are selling in a few days what they had been selling in a month. The goal of the program was to sell cars and in this regard it worked. Where it is failing is not accurately estimating consumer demand.
For those dealers and consumers who are concerned about going out and turning in their clunker to discover that the their sales contract won’t be honored, they are being told to go ahead and make the deal.
According to the Associated Press, Sen. Carl Levin, D-Mich. said the administration assured lawmakers that “deals will be honored until otherwise noted by the White House.” But he suggested that “people ought to get in and buy their cars.”
And at the White House, press secretary Robert Gibbs sought to assure consumers that the program is still running and will be alive this weekend. “If you were planning on going to buy a car this weekend, using this program, this program continues to run.”
So, if you’re planning on trying to buy a car as part of the Cash for Clunkers program the message is clear: go out and buy your car this weekend. No one knows when Monday roles around if the deals will be honored.
Photo source: www.news14.com