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Breaking: House Passes $2 Billion Cash for Clunkers Extension; Program Alive Through Weekend

Posted: Jul 31, 2009 03:54 p.m.

The federal government's Cash for Clunkers program will live on through the weekend, White House officials told reporters today.  The House of Representatives, meanwhile, passed a measure to add an additional $2 billion to the program, before members adjourn this afternoon for an August recess.  The Senate is expected to take up the measure early next week, where its fate is uncertain.

White House Press Secretary Robert Gibbs told reporters, "If you were planning on going to buy a car this weekend using this program, the program continues to run," according to the New York Times.  "If you meet the requirements of the program, the certificates will be honored." 

Michigan Senator Carl Levin (D) told the Detroit News, "The administration has assured dealers and consumers that rebates for vehicles already sold under the program will be honored now and through the weekend."

The Washington Post reports, "The House approved a bill Friday afternoon to provide $2 billion to continue" the week-old program, which had exhausted its $1 billion budget in just four days.  "The 316-109 vote split Republicans but attracted the support of nearly every Democrat in the chamber."  The funding "will come from funds in the already-passed economic stimulus package that were intended for energy loan guarantees. Congress will seek to replenish the energy program at a later date."

The additional funding will come to a vote in the Senate next week, however, the Post notes, it may face a more difficult road there.  "Conservatives who opposed both the original cash for clunkers program and the stimulus package as a whole may seek to slow the process, as might liberals who want the program's mileage standards to be revised upwards."

Still, some dealers may be reluctant to generate new cash for clunkers deals through the weekend, without some additional protection.  The Detroit Free Press reports, "the head of the National Automobile Dealers Association warned dealers today that until the money was guaranteed, they could be on the hook for any cash-for-clunkers trades despite assurances from the Obama administration that deals through today will be honored."

Some dealers are struggling simply to complete the transactions they have already agreed to.  A separate New York Times article notes, "Things sound like a total mess in the showrooms."  Miami dealership lawyer Alex Kurkin told the Times "There is absolute frustration across the board.  As of this morning, [dealers are] not really confident about any deals, and no one can give them advice about what they should be telling their customers." 

The program requires that dealers render the trade-in vehicles undriveable by running a sodium silicate solution through the engine, causing it to seize, before they can even apply for reimbursement.  Salvage yard operator Sally Ann Maggio, whose company conducts that process for dealers, told the Times "We have been overwhelmed with phone calls from the dealerships" looking to scrap trade-in cars as fast as possible.

Consumers looking to initiate a cash for clunkers deal this weekend should be cautious.  We have heard reports of dealerships asking customers to sign two sales contracts - one that will be in force if the government accepts the trade-in, another if it won't.  Customers should avoid such arrangements if at all possible. 

Kicking Tires, meanwhile, looks back on the numbers so far and declares the Cash for Clunkers experiment a success. Even if the average trade-in led to just a 4 mpg boost, they note, with 250,000 such transactions, "We're talking about 850,000 barrels of oil saved per year, or 35.7 million gallons of gas. We're talking about 593 million pounds of carbon dioxide that's not spewed into the atmosphere....Say what you will about the CARS program being bureaucratic mess, but when's the last time anyone made an environmental impact like this in one week?"

If you're interested in the Cash for Clunkers program, check out our Cash for Clunkers page.  For the latest news on the program, check out Cash for Clunkers news.