Last week, the Senate followed the lead of the U.S. House of Representatives in approving $2 billion to ensure that the “Cash for Clunkers” program has adequate funding to keep up with stronger than anticipated public demand. I supported the CARS Act, also known as Cash for Clunkers, when it first passed the House in June and I also voted for the additional funding on July 31. In its first few days of existence, the Cash for Clunkers program quickly proved that a relatively small amount of money targeted to consumers can be more effective at spurring public spending than big government “stimulus.”
For months, opinion polls have shown that the American people are unhappy with the unprecedented increase in federal deficit spending brought on by the Obama Administration’s $800 billion stimulus bill. Promises of “shovel ready” jobs jump-starting the stalled economy fell flat as unemployment levels rose to quarter century highs and some even talked of the need for a second stimulus. I voted against the $700 billion bailout of our nation’s financial industry, and, I also opposed the $800 billion economic stimulus. Both bills were ill-considered, did not help those who’ve suffered the most due to job loss and home foreclosures, and lacked details as to how the $1.5 trillion would be spent.
In June, Congresswoman Betty Sutton of Copley Township, near Akron, introduced a bill to offer incentives for those who wish to purchase new, more fuel efficient vehicles. Part effort to assist the ailing auto industry and to help the environment, the Cash for Clunkers bill quickly passed into law and has generated tremendous public response. The program ran out of initial funding almost as soon as it began on July 27, prompting nearly 160,000 new vehicle purchases within a week.
According to published reports, Michigan and Ohio ranked first and second, respectively, in total Cash for Clunker auto sales during the first week. Ohio car dealers alone racked up $29 million worth of sales. For regions like the Miami Valley, where auto industry jobs losses have been particularly high, this program is welcome news. Demand for new cars is driving many people to buy new cars and sales should benefit the local economy.
While the additional funding should keep Cash for Clunkers running long enough to satisfy the current demand, the program is set to expire on November 1. Basically, to be eligible for Cash for Clunker credit you must purchase or lease a new vehicle with a combined fuel economy of at least 22 miles per gallon. Your trade-in vehicle must be less than 25 years old and have a combined fuel economy of no more than 18 miles per gallon. The amount of credit you get for your new car purchase is $3,500 to $4,500, depending upon the vehicle type and the difference in fuel economy over your trade-in. Fuel economy values are different for some large pick-up trucks and cargo vans.
According to the program rules, auto dealers cannot use the Cash for Clunkers credit to offset any advertised rebates or discounts. Eligible trade-ins must have been continuously insured and registered to the same owner for no less than a year prior to the new car purchase.
For more information about the Cash for Clunkers program, including the eligibility rules, your trade-in’s combined fuel economy rating, and a list of participating auto dealers, visit the official government web site at http://www.cars.gov. You may also call the CARS Hotline at 1-866-CAR-7891 or TTY at 1-800-424-9153.
The Cash for Clunkers program is not without its flaws. Some dealers have reported trouble in processing vouchers. However, the program is already delivering considerable public interest and that is what is needed to turn this economy around.