The "Cash-for-Clunkers" (C4C) program will get an addition infusion of money, this time from stimulus funds. Passed in June, the program's purpose was to use rebates to subsidize car purchases and with the launch of the program this month, it seems Congress underestimated demand by just a little bit. Fortunately, this is a good problem for Congress, which has been accused of spending stimulating money too slowly - the House responded by passing HR 3435, which will allocate $2B from PL111-5 to the program.

The program provoked mild controversy earlier this year when Congress was debating the war supplemental bill. There were other aspects of the bill that stirred much greater debate, such as funding for the International Monetary Fund, but some legislators felt that C4C itself did not belong in a bill whose purpose was to fund foreign policy objectives. Aimed at "clunkers", or cars with lower fuel efficiency, the program provided $3500-$4500 in vouchers for purchases of new, more fuel efficient cars. The program officially kicked off on July 27th, although purchases starting from July 1st could qualify for the rebates. The U.S. Department of Transportation, which manages the program, began to raise concerns that cars were being purchased faster than the paperwork could be processed, ultimately leading to the temporary halt of the program.

The original version of the bill that narrowly passed the house (226-202, largely among party lines with 30+ Democrats voting against the bill) contained incentives valued up to $4.5B but this amount was later scaled back to $1B. The newest $2B allocation passed much more easily, 316-109, and calls for reallocating unused Energy Department loan guarantees that were contained in the original stimulus bill. The Senate will likely pick up the legislation next week, where there may be some objection to providing more subsidies to the auto industry. Given the success of the program, legislators are hoping to introduce new requirements, such as greater fuel efficiency or rebates for low-income communities. It remains to be seen whether Congress will be able to replicate this approach with other stimulus dollars.

For more details about the program, go to the site that the government set up.

CQ($):House Adds $2B to 'Cash for Clunkers'

Image by Flickr user youngthousands, used under a Creative Commons license.