Government suspends 'cash for clunkers' program

The government is suspending the explosively popular "cash for clunkers" program fearing it would go broke before it could parcel out what it still owes dealers for a huge backlog of sales.

The pending suspension was confirmed by Bailey Wood, legislative director for the National Automobile Dealers Association (NADA), which had been called Thursday night by the National Highway Traffic Safety Administration, which administers the program. Rep. Candice Miller, R-Mich., confirmed as well, saying she had been told by congressional leaders.

"Obviously the program has been an immense success in stimulating automotive sales," Wood said.

"The thing has exploded. It has exceeded everyone's expectations," said Miller, who was involved in writing the original legislation, known as CARS, for Car Allowance Rebate System. "Throughout our history, it has been auto sales that have pulled us out of recession. People are more likely to buy cars than houses. Not to be too Pollyannaish, but we're gettin' our mojo back. This could be the pivot" that begins an economic recovery.

The White House said Thursday night that "dealers and consumers should have confidence that all valid CARS transactions that have taken place to date will be honored."

As of late Thursday, the government had committed nearly all of the program's $1 billion, according to calculations by NADA and various congressional offices. It's unclear whether and how the CARS program could be restarted.

"We're in a full-court press trying to get more cash for 'cash-for-clunkers'," Miller told USA TODAY Thursday night — pointing out she wanted $4 billion for the program, not the $1 billion that was appropriated.

Rep. Betty Sutton, D-Ohio, also a co-sponsor of CARS who wanted $4 billion, got the news from DOT Secretary Ray LaHood Thursday night, according to Sutton's chief of staff Nichole Francis Reynolds. Reynolds said, "The program's spent $150 million and has another $800 million to $850 million in (pending) obligations… This is one of those programs you can really see working." She says CARS has "overwhelming support" and Sutton was pressing to free more money to continue the program.

DOT could not be reached for comment Thursday night.

Wood said dealers were amazed at how many shoppers visited their showrooms this week. The program has been in effect since July 1, but the details were finalized only a week ago.

The $1 billion was to provide rebates of $3,500 or $4,500 for people who traded in older cars rated 18 miles per gallon or less for new ones rated 22 mpg or more. The old cars are scrapped.

Political controversy already has begun over the popular CARS program.

If more money is earmarked for the program, it should require the new cars to get better fuel economy than under the original program, say Sens. Dianne Feinstein, D-Calif., and Susan Collins, R-Maine, who both played a role in creating the program.

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