House Quickly Sends $2 Billion More to ‘Cash for Clunkers’

The "cash for clunkers" rebate program, which promises new auto buyers up to $4,500 for fuel-efficiency upgrades as small as 2 miles per gallon, is back to life after burning through $1 billion in taxpayer cash.

Minutes ago, the House approved $2 billion more in auto rebates by transferring cash that was already headed for loan guarantees at the Department of Energy — averting the need to add the new spending to the deficit. The vote was 316-109.

The last-minute race to keep auto-industry benefits alive, which President Obama is strongly backing, now moves to the Senate. A bipartisan group there is already threatening to oppose new "clunkers" money unless its fuel-efficiency requirements are improved and used cars are approved for purchase rebates.

Right now buyers can get a $3,500 discount on new cars that get as little as 22 mpg. Small truck buyers are only required to improve 2 mpg to receive the same rebate, achieving a combined city and highway efficiency of 20 mpg.

An early version of the plan would have allowed the rebate value to be taken in transit coupons, but the DOT said earlier this week that no such option would be available.

Meanwhile, one environmental group that supported a stronger version of the "clunkers" plan that became law is now urging members to encourage the purchase of more efficient cars than the minimum.

"These are taxpayer dollars to help sell new cars," the Sierra Club wrote to its members. "It is up to consumers to put these dollars toward the purchase of highly efficient new vehicles not just a new guzzler."

Statistics on the early performance of the "clunkers" program, released by Rep. Ed Markey’s (D-MA) office, follow after the jump.

Late Update: 14 Democrats joined 95 Republicans in opposing the $2 billion. The 14 were Reps. Earl Blumenauer (OR), Stephanie Herseth Sandlin (SD), Brian Baird (WA), Lloyd Doggett (TX), Kurt Schrader (OR), Scott Murphy (NY), Jim Marshall (GA), Gabrielle Giffords (AZ), Allen Boyd (FL), Harry Mitchell (AZ), John Tierney (MA), Collin Peterson (MN), Jared Polis (CO), and Ann Kirkpatrick (AZ)

  • During the week that
    the program was launched, GM’s small car
    sales increased 54.8 percent over the preceding week.
  • The leading Ford
    vehicle being purchased under the program is the 28 mpg Ford Focus at nearly 30
    percent of all Ford sales.
  • Toyota
    reports that 78% of their "cash for clunkers" volume were the Corolla, Prius, Camry,
    RAV 4 and Tacoma,
    with a resulting average of 30 mpg.
  • Hyundai is reporting a
    59 percent increase in fuel economy compared to the old vehicle — which
    averaged 140,000 miles.
  • My Sirrus has nearly 15,000 miles and, if I were to upgrade to a road bike I might be able to optimize my miles per calorie ratio a bit. Think Uncle Sam might have a few dollars for me?

  • Larry Littlefield

    This is now a permanent subsidy. Every time the funds are exhausted, people will stop buying, waiting for the next $4,500 payment. The auto industry will argue that jobs are at risk and more money will be transferred.

    So who is responsible for it?

  • This is not “environmentalism”. It is two things: (1) a gift to middle-class Obama voters and (2) a means to prop up the auto industry, particularly Detroit. The cynicism involves reminds me somewhat of Bush’s $300 rebate checks.

  • This is pathetic. The Democrats are the new party of big business and special interest groups.

  • Andy

    Wow… I was really hoping they would modify the plan to force up the gas mileage average. I can’t believe my tax dollars are going to the purchase of new cars that are only 2mpg better.

    And of course it’s lame that even though I bike everywhere, I get no benefit. This is certainly not an environmental bill; it’s just a handout for those looking to buy new cars that happened to buy a bad one last time.

  • How is subsidizing people to buy cars helping the environment?

    How about transit funding or making our cities more pedestrian and bike friendly?

    Stuff like this just reinforces my belief that the United States is the most backwards developed nation when it comes to transportation

  • Paul

    How about cash for not driving 🙂 We should be taxing the crap out of cars and giving tax breaks and/or cash to folks that don’t own a motorized vehicle. Win Win!

  • Anon

    Boooooo Congress! Booooo!

    And this is not a gift for only the middle class. It’s anyone that purchased a car with crappy gas mileage to begin with. My rich in-laws just traded in a Lexus SUV for a Honda CRV to take advantage of the program. They don’t need a subsidy and I don’t want my tax money subsidizing anyone’s car purchases.

  • Any credibility to the suggestion that this has to do anything with the environment was destroyed when it was decreed that these funds couldn’t be used for transit vouchers. This is nothing more than taking money from one citizen to pay for the discretionary purchase of another citizen. It’s not a public service. It is not for assisting people with necessities. It is a simple transfer of funds. That is not behavior of the United States I pledge my allegiance to. Time for a letter to my Senators to express my extreme displeasure with this nonsense.

  • v

    $2 billion? disgusting.

  • This is unbelievable. I suppose the next step is to widen all of the highways to make room for our new toys.

  • Felix

    The Daily News had a nice picture of a couple who traded in an SUV for a slightly smaller one.

  • gecko

    It’s really about time Columbia economist Joseph Stiglitz does the financials on the automobile industry just like he did for the Iraq war where $3 trillion was found wasted. The level of waste is likely the same with the automobile industry.

    Then we’d have a baseline. Then we would able to point to the lack of logic and start our ascent out of the land of the lost.

    It has been well documented the effect of powerful special interest groups in spreading misinformation about global warming to delay action and to continue to delay action.

    It seems that this same source of misinformation, financial rewards, industry jobs, etc. has been steering this country’s technology strategies in an increasingly wasteful and dangerous direction which will ultimately cost us a lot more to correct.

    We can ill afford more melt-downs like the financial industry but, may be where we are heading with transportation.

    Not an expert on this but, it seems the current problems with the car industry were caused by the financial industry collapse. The next problems it seems will be because the automobile industry and the idea of the automobile industry is basically corrupt.

  • Larry Littlefield

    The $2 billion was deleted from a fund to finance renewable energy…

    Now look, these sums of money are not large. But it is offensive nonetheless.

    They are looking for ways to pay for universal health insurance financing. One way to do that is to eliminate whole areas of federal activity, beginning with transportation.

  • Mr. Littlefield said; “Now look, these sums of money are not large.”

    What an astonishing comment! The amount of money we are talking about is 3,000 X $1,000,000. Three thousand millions that we don’t have! The federal government is going to borrow the money, or failing that, simply print it!

    It is pulling forward future productivity in two ways. The borrowed money is a claim on future “income”- reducing the eventual recovery by dislocating capital for goods bought in the past.

    It is pulling forward future car sales. The traded in cars would have had to be replaced eventually. This program just moved the “replacement day” forward- at the cost of future sales.

    This is all “housing bubble” thinking, and it is just going to prolong the pain. How is that hope and change working out for you?

  • gecko

    #15 ChipSeal, Hard times.

    Re: Prolonged Aid to Unemployed Is Running Out, http://www.nytimes.com/2009/08/02/us/02unemploy.html

    “Representative Jim McDermott, Democrat of Washington and chairman of the House Subcommittee on Income Security and Family Support, said he would introduce a bill in September to provide yet another 13 weeks of coverage in states with unemployment rates of 9 percent or higher. “Legislators will line up quickly when they start getting calls from desperate constituents,” he said in a telephone interview.

    “The cost would be $40 billion to $70 billion, but the expense would be temporary, Mr. McDermott said.

    “Some business groups remain skeptical.”

ALSO ON STREETSBLOG

Separating Myth From Fact on “Cash for Clunkers”

|
As debate rages on in the capital over whether to keep assisting the auto industry by giving out more "cash for clunkers" rebates, two assertions are becoming commonplace: the program is helping diminish U.S. oil consumption, and the program is not paid for with new money. Photo: AP The first argument was reiterated on Friday […]

As “Cash for Clunkers” Sputters, a Privately Funded Spinoff Picks Up

|
The U.S. DOT began signaling yesterday that it would bring the "cash for clunkers" program to an end amid growing unease from auto dealers about the government’s slow pace of reimbursement and General Motors’ decision to begin fronting "clunkers" repayments to its own salesmen. Photo: AmericaJR.com But with auto-industry forecasters predicting a cool 1 million […]
STREETSBLOG USA

Report: “Cash for Clunkers” Was a Lemon

|
Here’s the thing about subsidies: They encourage people to do more of something than they would have under normal circumstances. That’s okay if the activity the government is subsidizing creates an overall benefit for society — like better educated kids, or a cleaner environment. But if said subsidy encourages behavior detrimental to society, well, that’s […]

How to Judge “Cash for Clunkers”

|
(Photo: NYT) At this point, it’s difficult to know exactly what the government’s "cash for clunkers" program is supposed to accomplish. Claims about its economic and environmental benefits are increasingly detached from reality, and the chief advantage of the program would seem to be that it "worked," in the sense that it was popular among […]