Well, that was fast. Uncle Sam is out of cash for clunkers.
The New York Times reports, "New-car shoppers appear to have already snapped up all the $1 billion that Congress appropriated for the 'cash for clunkers' program, leading the Transportation Department to tell auto dealers Thursday night to stop offering the rebates." White House Press Secretary Robert Gibbs, however, says the program has not been formally suspended. In a late Thursday statement, Gibbs told reporters, "We are working tonight to assess the situation facing what is obviously an incredibly popular program. Auto dealers and consumers should have confidence that all valid CARS transactions that have taken place to date will be honored."
How did this happen so quickly? The Los Angeles Times explains, "The program, designed to jump-start car sales and improve the fuel efficiency of the nation's auto fleet, unleashed a wave of pent-up demand that threatened to exhaust funds before dealers could be fully reimbursed for rebates under the plan." The Department of Transportation offered daily updates on how much of the $1 billion in funding remained, accounting for all of the transactions it had processed and paid out - but the pile of transactions submitted to the department and not yet processed wasn't counted toward that figure. Government officials simply couldn't process the transactions quickly enough, but they fear that the total number submitted and not yet processed may exceed the $1 billion available.
Senator Debbie Stabenow (D.-Mich.) told Reuters, "more than 200,000 vehicles had been sold since the program was formally launched six days ago, pushing available funding in the form of consumer rebates near its limit." But officials can't be sure of the total until they finish processing all of the transactions already submitted.
By some calculations, the program had enough funding for each participating auto dealers to complete about 12 sales - but some dealers had completed 50 or more transactions in the program's first few days.
The Washington Post reports, "Transportation Secretary Ray LaHood called lawmakers Thursday afternoon to warn them the program would be halted at midnight, according to congressional sources...But later, administration officials said that no such suspension was planned and that all valid transactions under the program would be honored."
Some lawmakers are already seeking a funding extension for the program. The Post reports, "Lawmakers from Michigan held a conference call Thursday night to discuss the matter and were scheduled to have another joint call at 9 a.m. Friday. They were preparing to speak with Obama administration officials about obtaining more funding, staffers said, and were committed to finding a way to extend the program."
The original Cash for Clunkers bills proposed in both the House and Senate had carried $4 billion in funding, but that amount was trimmed to just $1 billion by the time the proposal passed both houses.
So, for those of us holding onto a clunker in hopes of cashing in soon, what should we expect? The New York Times reports, "As word spread unofficially on Thursday night, car dealers were suddenly unsure of what to tell would-be buyers."
The Washington Post adds, "Several local dealers said in interviews that they would wait to see how the government was going to proceed with the program before they accepted any more clunkers. Dealers had been expecting an overwhelming response to the program to continue through the weekend."
We'll bring news of any government decision on more funding as soon as we have it. For now, White House officials insist the program has not been formally suspended, but there is no word on whether or not dealers will take the risk of completing more sales knowing they may not be reimbursed.
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.
