BREAKING: House, Senate reach terms on 'Cash for Clunkers' program - but only with $1B in funding
by Chris Paukert on Jun 12th 2009 at 10:26AM 
According to The Detroit News, the House and Senate came to terms late last night on a $1 billion 'cash for clunkers' initiative. Part of a larger $106 billion wartime spending bill, the program is not yet law, as the finalized bill must be passed by Congress (it is expected to be voted on next week) and signed into law by President Obama.
Under the terms of the compromise, vouchers worth up to $4,500 would be distributed to those who turn in old vehicles. The program's $1B backing figures to be well short of the $4B it is estimated to cost, meaning that the funding is expected to run out after September 30, the end of the fiscal year. As the theory goes, getting the program approved was the first big step – the DetNews says that key supporters believe that additional funding could be agreed upon subsequently.
As you may recall, the House approved the measure earlier this week, but there were reports of some significant troubles in the Senate where funding and mileage requirements were concerned. In the end, the same mileage figures were reportedly agreed upon, meaning vehicles that return 18 mpg or less in combined city/highway are eligible to turn in their vehicle for a cash voucher. If the new car replacement achieves at least 4 mpg better, a $3,500 voucher would be awarded, and if the new car achieved at least 10 mpg more, the credit would be $4,500. Trucks figure to be a bit different, however, with replacement vehicles needing to net at least 18 mpg, with figures at least 2 mpg better than the soon-to-be-scrapped turn-in. In order to receive the full $4,500 voucher, however, truck buyers' new vehicle would have to improve their fuel economy figures by at least 5 mpg.
[Source: The Detroit News | Image: Theo Heimann/Getty]]
Reader Comments (Page 1 of 4)
Sea Urchin 10:31AM (6/12/2009)
So once again, because someone choses not to buy a car, but instead to fund his child's college fund gets robbed to pay for people who own cars...and not just cars, but the most polluting ones.
When will this stop?
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Boudu 10:44AM (6/12/2009)
Car purchases accounting for 20 percent of all retail sales in the US, a similar program has been a huge success in Germany. Its really just a stimulus, and not really a 'green' initiative.
It's estimated this program will impact up to 120,000 additional U.S. jobs within 12 months. The goal is to bring back tax revenue, this in turn cold end up paying for itself.
More importantly, it's a method to get people spending and to restart the economy. This benefits everybody, including your child's college fund in the long term.
Sea Urchin 10:50AM (6/12/2009)
“Car purchases accounting for 20 percent of all retail sales” that must mean that 60% of other retail sales must be clothing, books, computers, ….do these stores not hire people? Do people who do not own cars buy jeans or laptops?
Also, how do you bring back tax revenue when you give a tax credit.
This is D3 at its best, hire lobbying (using taxpayers money mind you) and get a law that will cover a huge % of the purchase.
Now I understand if this was the case where you turn in a car that gets 15 MPG and you buy 30+ MPG car, but that is not the case at all.
This is truly shameful.
wilbonnet 11:52AM (6/12/2009)
well 1. this is another way in which this new administration is telling us how to live our lives. 2. at least you can buy a pos camaro for a couple hundred and get a new v6 one for 4500 off...
Rocketboy 12:41PM (6/12/2009)
So it's a stimulus to encourage people to over-extend themselves by buying something that they don't specifically need?
Bizzle 1:03PM (6/12/2009)
wilbonnet, wrong you need to have owned the car for a year.
Temple 12:45PM (6/12/2009)
>>Also, how do you bring back tax revenue when you give a tax credit.
The average car purchase in America is over $30,000, the tax-credit is $3,500-4,500. This $1B program can stimulate a multitude of billions of dollars of purchases in a sector that needs it most. It should be simple to see.
That stimulus gives reciprocating value, not just directly from the purchased cars itself but from ancillary benefits. The salesman, suppliers, manufacturers also can spend that money to further promote spending and demand.
Luis 10:33AM (6/12/2009)
I think $1B is plenty - with all the restrictions I think it's going to fail.
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LMBVette 11:09AM (6/12/2009)
I agree with you 100%. No way they end up using even 1/4 of the funds due to the limitations.
tankd0g 11:24AM (6/12/2009)
I'm sure someone will find a way to scam at least half a billion for themselves.
BoxerFanatic 12:05PM (6/12/2009)
That was a government estimate of how much it would cost...
When was the last time a government estimate was over the mark, and something the government costing LESS than estimated?
NEVER.
This is a ridiculous bill, something that the government has no business doing, and by doing it without funding it, they are going to deficit spend even more.
Pay-Go is a red herring, and bullcrap.
The government should never pay people for their trash, so that they can buy new, when they can't afford new anyway, and tax it away from other people, so NOONE can buy new.
Taxing Peter to pay Paul is illegal, GROSSLY immoral, and shouldn't even be considered in a free country.
You want a new car, WORK, and BUY one. Don't tax me for part of it.
This business has gotten out of control. It is out of control, and this country will be lucky if it survives it...
Bman 10:37AM (6/12/2009)
The guesswork would be eliminated if they were to create a list of cars & trucks that qualify for the voucher.
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Nightcrawler 6:12PM (6/12/2009)
True, but on the other hand it's not that hard either. You can find out whether any car is eligible in about 30 seconds at www.fueleconomy.gov.
Saxxon 6:29PM (6/12/2009)
With the all the lies this current administration has spewed out in just over 100 days, what makes anyone think that it will only cost $1 billion!?
They think losing 345,000 jobs in just one month is signs of "progress".
They STILL don't know how much Chrysler and GM's bankruptcy are going to cost tax payers in the long run.
And now they say that socialized health care will ONLY cost $600 BILLION!!!!!
I wouldn't believe any of these fools as far as I could throw them.
Dave 10:44AM (6/12/2009)
They just should call it "Cash for Trucks". The 18mpg figure is too low for many cars to qualify, and the requirements are so much easier for trucks.
It's a shame, I have a 16 year old car that I would definitely consider trading for something shiny, new, and American under this program. But instead I'll likely end up with something almost as shiny, used, and not necessarily domestic.
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jurm 3:25PM (6/12/2009)
That was my thought as well. I'd love to be able to get more than KBB value for my 99 escort ($1200 last I checked, 700 trade in), but it gets decidedly better than 18mpg.
Although I'm sure I could sabotage it to the point where it was only getting 18.....
oinky 3:58PM (6/12/2009)
I was hoping my 94 Camry would qualify so I can trade it in for a new Fiesta coming up, but since I get 25mpg combined, I am out of luck.
This legislation does not make any sense...who gets 18mpg unless you own a truck, suv, minivan or a muscle car? What about the rest of the masses who owns an old clunker and wants to get a new American made car?
Don't call it Cash for Clunkers if you deliberately leave out the majority who own cars. Always leave it to the politicians who manage to screw up a perfectly decent legislation.
mohandin 10:47AM (6/12/2009)
the last straw to try to save US auto industry? IMO you can't stop tsunami no matter how much US government tries, US automotive days are numbered. They are only making the process painful and lot more expensive.
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Saxxon 6:31PM (6/12/2009)
DING! DING! DING!
We have ourselves a winner!!!
The Hit 12:12AM (6/13/2009)
"IMO you can't stop tsunami no matter how much US government tries"
Credit where credit's due. Meanwhile, the Dow Jones is at it's highest since Jan.