Officials Try to Refuel 'Cash for Clunkers'

Claims for $1 billion available credit already in pipeline, officials are told.

October 3, 2008, 6:05 PM

July 30, 2009 — -- Officials are reportedly working to keep the government's popular "cash for clunkers" program going amid reports its success may have caused it to run out of money within a week.

"We are working tonight to assess the situation facing what isobviously an incredibly popular program," White House presssecretary Robert Gibbs said of what is officially called the Car Allowance Rebate System, according to The Associated Press.

"Auto dealers and consumers should have confidence that all validCARS transactions that have taken place to date will be honored," Gibbs said.

Members of Congress had been told about the possibility of suspending the popular program, perhaps by early Friday, sources told ABC News, because it was believed consumers had already applied for the $1 billion credit in the program's budget.

The exact amount claimed since the program began last Friday was not immediately clear amid reports of paperwork backlogs.

"This was a very successful program, maybe even too successful," Sen. Charles Schumer, D-N.Y., said in a prepared statement this evening. "The program should continue, but perhaps with a tuneup so that we get the most stimulus, conservation and efficiency for the buck."

Auto dealers have reported the program was jump-starting business slowed by the recession. Thousands of Americans have been taking advantage of the program, which was to end when the funding ran out.

The National Automotive Dealers Association said the group did not yet have official confirmation that "Cash for Clunkers" was ending, "but if the program is indeed suspended, NADA will continue to work with the Department of Transportation to emphasize the importance that every dealer is reimbursed for a valid deal," the group said in a statement. "We will also work with the Obama administration and members of Congress to meet the demonstrated consumer interest in the "Cash for Clunkers" program."

In a joint statement, Sens. Dianne Feinstein, D-Calif., and Susan Collins, R-Maine, argued it might be possible to revive the program, but that new vehicles under the plan should face tougher standards.

"The extraordinary reaction to the 'Cash for Clunkers' program demonstrates that consumers do want to purchase more fuel efficient, less polluting vehicles," they said.

"We will insist than any extension of the program requires that the minimum fuel economy improvement for newly purchased vehicles be at least two miles per gallon higher than it is under the enacted clunkers program," they added. "It is also important to include lower-income consumers who are disadvantaged under the current program. So, we would also include a voucher for the purchase of fuel-efficient used vehicles."

'Cash for Clunkers' Guidelines

Here's how the existing "cash for clunkers" program worked:

Auto dealership owner Scott Addison said he saw "lots and lots of interest."

"We've got people coming out of the woodwork. I haven't seen this many clunkers in my life," Addison said.

Hanan Shemtov of Silver Spring, Md., made one of the thousands of deals under the program Tuesday night. He traded in a 1991 Chevrolet G20 van worth only about $400 and got $4,500 in return through the government program.

"It's actually the only reason I'm doing that," Shemtov said. "Otherwise, I wouldn't have bought a new car."

The program was not a good deal if a used vehicle was worth more than the government credit, because the credit is in place of the trade-in value.

One other disappointment: In recent days, the government changed the fuel-economy ratings for about 100 cars, so some people who thought they had qualifying vehicles didn't.

The government was hoping buyers would visit one of the 16,000 participating dealerships and help repair the auto industry.

The following links offer more detail on the "cash for clunkers" program.

Overview of the "cash for clunkers" program

Check Your Vehicle's Fuel Economy

Would Your Car Qualify? Try This Calculator to See

List of Likely Eligible Vehicles

ABC News' Elisabeth Leamy, Matt Hosford and Sharyn Alfonsi contributed to this report.

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