‘Cash for Clunkers’ Out of Cash — But Not Quite Finished

The U.S. DOT may have notified car dealers last night that its watered-down "cash for clunkers" plan was already out of cash, but that doesn't mean the rebates are on their last legs. With the White House vowing to protect the program, Congress soon could have to decide whether to keep the good times rolling for auto companies.

(Photo: AP)

Lawmakers approved an initial $1 billion in June to offer taxpayer-subsidized credits of $3,500 and $4,500 to new car and truck buyers, reportedly prompting dealers to begin assuming backlogs of "clunker" rebates that were abruptly cashed in when the program formally began this week.

That rush to capitalize on the "clunkers" deal has led Democrats as well as many in the media to frame the program as, essentially, a victim of its own success.

Rep. Ed Markey (D-MA), co-author of this Congress' landmark climate change bill, said in a statement that he hopes to spur a million car trade-ins: "Cash for Clunkers may have run out of cash, but America’s
consumers haven’t run out of clunkers."

Sen. Charles Schumer (D-NY) echoed Markey's call to keep the program alive, calling it "maybe even too successful." He suggested giving the rebates "a tuneup so that we get the most stimulus, conservation, and efficiency for the buck."

Indeed, the question this morning may not be whether the program gets more money but if environmentally-minded lawmakers heed the warnings of conservation groups and insist on greater fuel-efficiency improvements in order to qualify car buyers for the deal.

Sens. Dianne Feinstein (D-CA) and Susan Collins (R-ME), who joined Schumer on a rival "clunkers" bill that would have set stricter fuel standards, announced last night that they would only support a stronger version of the program:

Collins and Feinstein are likely to face resistance from lawmakers from auto-producing states such as Michigan and Ohio, who won looser rules to help resuscitate their local industry and moved environmental concerns to the back seat.

One thing is certain: With the House set to depart this weekend for a month-long recess, prospects of reaching an agreement on more cash for the program appear slim. But Congress and the White House have proven themselves willing to go the extra mile to help automakers -- so lawmakers may still pad car buyers' pockets before leaving town.