“Cash for Clunkers” Update: House approves $2B additional cash infusion; Senate vote ahead
(Source: Bloomberg)
The future of the U.S. “cash for clunkers” program depends on the Senate backing a $2 billion infusion this week, with at least one Republican saying he was going to try to block the effort.
“We’ve got to slow this thing down,” Senator Jim DeMint, a South Carolina Republican, said on “Fox News Sunday.”
The House voted 316-109 on July 31 for an emergency measure adding $2 billion to the program aimed at reviving U.S. auto sales, after a burst of demand exhausted most of the initial $1 billion in less than a week.
Transportation Secretary Ray LaHood said in a C-SPAN interview Sunday he expects the current $1 billion in funding to be gone by the end of the weekend. The administration will continue the program until the Senate acts, and dealers will be reimbursed for deals in the pipeline, he said. The government will make a “good-faith effort” for transactions beginning tomorrow, he said.
DeMint said he opposes the program because “we’re helping auto dealers while there are thousands of other small businesses that aren’t getting help.”
Named the Car Allowance Rebate System, the program provides credits of as much as $4,500 for the purchase of a new car when turning in an older vehicle to be scrapped. Lawmakers had expected the first $1 billion to generate about 250,000 vehicle sales and last until about Nov. 1.
The National Automobile Dealers Association said last week that its members should be cautious about signing more deals with customers under the program. Dealers provide buyers the discount they qualify for under the program and then submit paperwork for reimbursement to the federal government.
Demand kindled by the clunkers program may push U.S. auto sales to a 2009 high in July, possibly signaling a bottom in the market’s worst slump since at least 1976. Sales have run at a seasonally adjusted annual rate of fewer than 10 million units since December. That pace trails last year’s total of 13.2 million and the 16.8 million average from 2000 through 2007.
The program was designed to subsidize more new-vehicle purchases in the effort to revive dealerships and automakers while getting older, less fuel-efficient vehicles off the road. It has been advertised by automakers in print and on television.
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