Is Cash for Clunkers Over in 4 Days? Out of Money?

Holy Smokes! If you have not been listening to the news lately, it’s being reported that the Government’s ‘Cash for Clunkers’ program has basically run out of money in 4 days?  Well, forgive the observation but isn’t this the same group of representatives that plan on giving you and me a Healthcare Overhaul for $1 Trillion Dollars?  OMG – help us please!  I digress.

The Transportation Department is preparing to suspend its $1 billion “Cash for Clunkers” program by the end of Friday, after it had all but run out of money, but said it would still honor the vouchers until midnight.  What’s going to happen now is that Congress will be approving another $1 billion dollars for the program so that they can leave for vacation and talk about how successful the ‘Clunkers’ program is.

My math may not be the best but at a 10,000,000 sales rate for the year, with 6 sales days per week, that is about 32,000+ cars/day sold in the US. The CARS program will support a maximum of 285,000+ cars if everyone only gets $3500, and 222,000+ if everyone gets $4500 (The actual number lies somewhere in between). At around 32,000+ cars/day, that translates into 7-9 days of sales if every car purchased qualified for CARS. If only half qualified, then that would be 14-18 days.

It sure looks to me like someone didn’t bother to check their math to see how much of a difference this would make, or how long it would likely take to burn through the money.

The surprise revelation came FOUR DAYS after the program started and prompted an urgent series of meetings on Capitol Hill and at the Transportation Department to figure out if and how it would replenish the funding.

Transportation Secretary Ray LaHood made a round of calls to members of Congress notifying them that the program was out of money, talking to Sen. Carl Levin, D-Detroit, among others. He was making a push to try to find funding to keep the program alive.

It’s not clear what will happen if dealers submit more requests for vouchers beyond the $950 million in the program but I’m hearing that all the vouchers will be honored if submitted by midnight today. The remaining $50 million is set aside to cover administrative costs.  You know, for another $50 million plus $950 million more, we can do it all over again.

The White House said late Thursday it was considering its options.  I just can’t imagine what those would be, can you?

“This is simply the most stimulative $1 billion the federal government has spent during the entire economic downturn,” said U.S. Rep. Candice Miller, R-Harrison Township. “The federal government must come up with more money, immediately, to keep this program going.But action must be taken fast, as the House was set to adjourn today for its August recess and not return until after Labor Day.  I’m still betting that they will approve more money before they leave for vacation to listen to their constituency.

In an article posted by Michelle Krebs of Edmonds, she noted that dealers think the gauge is in reality on empty. Dealers and dealer organizations have expressed their concern to government officials as the program began, 4 days ago, that they had far more transactions in the works for consumers to trade their clunkers for more fuel-efficient vehicles than the program had in funds. Dealers have always feared they would be left holding the bag for the vouchers of up to $4,500 if the government funds ran out.

On Wednesday night, sources said the National Automobile Dealers Association surveyed its dealers to gauge how many Cash for Clunker transactions they had in the works. The average number of working deals for the 1,900 dealers who responded amounted to nearly 14 transactions, with more deals qualifying for the top $4,500 voucher than the $3,500 voucher.

The program offered consumers up to a $4,500 voucher for turning in vehicles that in the case of passenger cars got no more than a combined city/highway 18 miles per gallon. To qualify for the full $4,500 the new vehicle purchased must have a 10 mpg improvement. To get a $3,500 voucher, it needed a 4-mpg to 9-mpg boost. The program is limited to vehicles no more than 25 years old, which the owner must have owned and insured for the previous year.

Well Time will tell – what will congress do?  What pressure will the White House put on Congress?  Will the American People support it or blow it off? I’m still saying they will approve another Billion or two dollars of your tax money to keep it alive.  Stay tuned ………