Cash for Clunkers Program Could Be Broke

The idea of the Cash for Clunker program was to get gas guzzling junkers off the street. Doing so would clean the air, save on energy (gas), and help move the economy.

Little did anyone know that it would become so popular. So popular, that in seven days time the program has exceeded it's financial limit.

Some dealers, in the Chicago area, were putting the program on hold do to lack of funds. Here is what is happening. The legislation authorized 4 billion dollars for the program. However, the Senate only approved one billion dollars for it. The program has been so successful in such a bad economy, that the first billion is about to run out. As a matter of fact, as I write this article, it could be broke.

The main House sponsor of the legislation was working late Thursday night trying to find more money for the program. That sponsor is Rep. Betty Sutton(D-Ohio). However, two Senators were trying to change the rules of the bill. Senators Feinstein (D-California) and Sutton (R-Maine), were wanting to up the condition that the new cars bought must get two more miles per gallon than the bill allows for now.

Car sales had been very slow. The recent program of Cash for Clunkers was beginning to improve sales. Now it could have a backlash affect, if the program stalls or even drops.

Ford had set up a web site called Recycle your Ride. It dealt with the Cash for Clunkers program. It had over one million hits in two weeks.

Dealers are required to give buyers between $3500 and $4500 for discounts. The dealers then turn in a voucher to the government for reimbursement. Not knowing if the money will be there, dealers are holding up the program. If they continue the program without money, they could be out of millions. That is not an area they care to venture in, in this bad economic times.

Nobody thought that the program would be this successful.

sources; www.chicagotribune.com