Obama Signs $2 Billion Plan to Keep ‘Clunkers’ Going
President Barack Obama signed legislation giving $2 billion to the “cash for clunkers” discount program as federal officials said the initial $1 billion in funding has been exhausted.
The Transportation Department said today that it had received 245,384 dealer applications for reimbursement funds totaling $1.03 billion through today.
The Senate voted 60-37 to extend the program last night, six days after the House took the same action. Obama then issued a statement calling the government initiative “a proven success” that will provide a “much-needed boost” to the economy.
Some analysts such as Dean Maki, chief U.S. economist at Barclays Capital Inc. in New York, have boosted forecasts for growth in the second half of the year due in part to the influence of the cash for clunkers program on manufacturing and consumer spending.
Sales for Ford Motor Co. rose for the first time since 2007 after the program began in July. Vehicle sales for General Motors Co. and Chrysler Group LLC fell during the month, compared with a year earlier.
Some Republicans tried to halt the program, saying it was expensive and so poorly administered that it was unclear whether the initial funding was exhausted or how many cars had been sold.
‘Cash for Golf Clubs’
Senator John McCain, an Arizona Republican, described the program as arbitrary and expensive, saying Congress should next embark on a “cash for golf clubs” offer.
Seven amendments, including one that would have imposed an income limit for participants and another to temporarily halt the program to clear a backlog of discount applications, were rejected before the final vote.
Any alterations to the program would have forced a suspension in the auto discounts until September, when the House returns from a monthlong recess.
The Car Allowance Rebate System provides credits of as much as $4,500 for the purchase of a new car when turning in an older vehicle to be scrapped. Lawmakers had expected the first $1 billion to generate about 250,000 vehicle sales and last until about Nov totally free credit score. 1.
The program has boosted sales for the ailing auto industry while removing pollution-belching cars from U.S. roads, said Senator Debbie Stabenow, a Michigan Democrat.
Effective Plan
This is the “single most effective stimulus plan to date,” Stabenow told reporters after the vote.
The infusion of funds is intended to extend the program through August. Stabenow said it wouldn’t need a third allocation.
GM, the largest U.S. automaker, has the most sales under the program, according to Transportation Department data released this week.
The Detroit-based company sold 18.7 percent of the cars purchased under the plan. Toyota Motor Corp. based in Toyota City, Japan, had the second-most sales with 17.9 percent. Dearborn, Michigan-based Ford, was third with 16 percent. The agency released data on each automaker’s overall share a day after providing a list showing that four of the top five models sold were made by foreign automakers.
Toyota’s Corolla was the top model purchased by clunkers buyers through Aug. 5, surpassing Ford’s Focus, which had been No. 1, according to the data.
Three Largest
Vehicles made by the three largest U.S. automakers — GM, Ford and Chrysler — comprised fewer than half of sales under the program through Aug. 5, according to the Transportation Department data. The companies accounted for 45 percent of the clunkers transactions. Some vehicles sold by foreign companies are manufactured in the U.S.
Ford’s Explorer was the most popular trade-in vehicle, followed by Ford’s F150 pickup and Chrysler’s Jeep Grand Cherokee. All of the top 10 trade-in models are made by the three U.S. automakers.
The average fuel economy of the vehicles purchased is 25.3 miles-per-gallon, a 60 percent improvement over the 15.8 miles- per-gallon average of the trade-ins.