Money Matters, Simplified.
CARS ready for the second lap
by Jamie Anderson - August 7, 2009 - comments
The Senate refueled the hugely popular Cash for Clunkers program Thursday when it voted 60 to 37 in favor of a $2 billion additional cash infusion for CARS.
New York, August 7: The Cash for Clunkers program that has been instrumental in making the ailing U.S. auto industry record its best performance of the year will get another infusion of $2 billion.
The original $1 billion allocated towards the program helped sell as many as 220,000 vehicles within a short span of a few days. The Senate approved the extension of the program by 60 to 37 votes.
Passed without alterations
The House of Representatives had passed the $2 billion addition on July 31. The Senate confirmed its consent after a week on Thursday.
Republican Senator Jon Kyl of Arizona suggested a “time-out” in the program officially called CARS, Cars Allowance Rebate System.
The logic of such a delay would be to ensure proper accounting of the first phase of the program and make certain that dealers do not offer discounts that the administration cannot refund. The said amendment was, however, rejected by a 57-40 vote.
In all, there were seven proposed amendments to the measure. But the Senate rejected the proposed changes as any modification in the adaptation that the House passed July 31 would have meant suspension in the program at least till Sept. 8, the earliest day when the House could come back from a break and vote on the changes.
Program a success
President Barack Obama, who is now expected to sign off the measure, said that the economy "will continue to get a much-needed boost" from the program.
"The initial transactions are generating a more than 50% increase in fuel economy; they are generating $700 to $1,000 in annual savings for consumers in reduced gas costs alone, and they are getting the oldest, dirtiest and most air polluting trucks and SUVs off the road for good," added the President.
Senator Debbie Stabenow, a Michigan Democrat said, “This will probably be the last infusion of dollars. This has been incredibly successful, and it really goes right to the heart of creating demand.”
The program has benefitted almost all stakeholders. Customers have enjoyed the $3500 to $4500 rebates while they swapped their old gas guzzlers with more fuel efficient cars; suppliers of raw materials, supplies and spare parts have got new business; advertisers have had something to cheer about and the dealers have heaved a sigh of relief as they saw their ever mounting inventory make way to the U.S. roads.
Economist Richard Yamarone of Argus Research, however, is not optimistic about the long term benefits of the program. He said, “Once these clunker rebates expire, it is over. Consumers are not going to keep buying cars. It is a temporary one-time gimmick, not a long-lasting tonic for the recovery."