Running on empty? White House reviewing ‘cash for clunkers’ program

July 31, 2009 11:00:00 AM

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A lawmaker says he''s been assured by Transportation Secretary Ray LaHood that the financially strapped "cash for clunkers" program will be good at least through today. 

 

Michigan Sen. Carl Levin said he got the word from the Obama administration as members of the Ohio and Michigan congressional delegations huddled on Capitol Hill to discuss ways to keep the popular program going. 

 

Levin, a Democrat, said he received assurances that cars could be purchased under the program today. He also said that beyond today, "depends on whether the administration can find some money." 

 

The White House said Thursday it was reviewing what has turned out to be a wildly popular "cash for clunkers" program amid concerns the $1 billion budget for rebates for new auto purchases may have been exhausted in only a week. 

 

Transportation Department officials called lawmakers'' offices earlier Thursday to alert them of plans to suspend the program as early as today. But a White House official said later the program had not been suspended and officials there were assessing their options. 

 

"We are working tonight to assess the situation facing what is obviously an incredibly popular program," White House press secretary Robert Gibbs said of the Car Allowance Rebate System. "Auto dealers and consumers should have confidence that all valid CARS transactions that have taken place to date will be honored." 

 

Gibbs said the administration was "evaluating all options" to keep the program funded. 

 

Emplyees at Golden Triangle car dealerships were quick to comment on it, in light of the boom the businesses experienced because of the program, and the potential for it to die out as quickly as it began.  

 

"I expect it''ll get more funding if it''s been as successful as they say it has," said Columbus Nissan General Manager Russell Street.  

 

Street added, "It''s definitely been a successful program so far, and public demand for it has been high, so no doubt it would be great if they could get more funding for it and we could continue on. That would be good." 

 

Stan Gunnels, sales manager at Premier Ford in Columbus, said he hopes the program continues, but it''s not something Ford controls -- the ball is in the government''s court. 

 

"The dealerships could be left holding the bag for this thing," he said. "...You could be out considerable sums of money." 

 

The CARS program offers owners of old cars and trucks $3,500 or $4,500 toward a new, more fuel-efficient vehicle. 

 

Congress last month approved the program to boost auto sales and remove some inefficient cars and trucks from the roads. The program kicked off last Friday and was heavily publicized by car companies and auto dealers 

 

Through late Wednesday, 22,782 vehicles had been purchased through the program and nearly $96 million had been spent. But dealers raised concerns about large backlogs in the processing of the deals in the government system, prompting talk of a possible suspension. 

 

A survey of 2,000 dealers by the National Automobile Dealers Association found about 25,000 deals had not yet been approved by NHTSA, or nearly 13 trades per store. It raised concerns that with about 23,000 dealers taking part in the program, auto dealers may already have surpassed the 250,000 vehicle sales funded by the $1 billion program. 

 

"There''s a significant backlog of ''cash for clunkers'' deals that make us question how much funding is still available in the program," said Bailey Wood, a spokesman for the dealers association. 

 

Alan Helfman, general manager of River Oaks Chrysler Jeep in Houston, said he was worried that the government wouldn''t pay for some of the clunker deals his dealership has signed because they aren''t far enough along in the process. 

 

His dealership has done paperwork on about 20 sales under the clunker program, but in some cases the titles haven''t been obtained yet or the vehicles aren''t yet on his lot. 

 

"There''s no doubt I''m going to get hammered on a deal or two," Helfman said. 

 

The clunkers program was set up to boost U.S. auto sales and help struggling automakers through the worst sales slump in more than a quarter-century. Sales for the first half of the year were down 35 percent from the same period in 2008, and analysts are predicting only a modest recovery during the second half of the year. 

 

So far this year, sales are running under an annual rate of 10 million light vehicles, but as recently as 2007, automakers sold more than 16 million cars and light trucks in the United States. 

 

Even before the suspension, some in Congress were seeking more money for the auto sales stimulus. Rep. Candice Miller, R-Mich., wrote in a letter to House leaders on Wednesday requesting additional funding for the program. 

 

"This is simply the most stimulative $1 billion the federal government has spent during the entire economic downturn," Miller said Thursday. "The federal government must come up with more money, immediately, to keep this program going." 

 

Michigan lawmakers planned to meet on Friday to discuss the program. 

 

Brendan Daly, a spokesman for House Speaker Nancy Pelosi, D-Calif., said they would work with "the congressional sponsors and the administration to quickly review the results of the initiative." 

 

General Motors Co. spokesman Greg Martin said Thursday the automaker hopes "there''s a will and way to keep the CARS program going a little bit longer." 

 

Dispatch reporter Jordan Novet and AP Auto Writer Tom Krisher in Detroit contributed to this report. 

 

UPDATE 2:06 PM CST: According to AP, an additional $2B has just been approved for the Cash for Clunkers program.