House Adds $2 Billion to Cash for Clunkers

The House just put another $2 billion into the wildly popular Cash for Clunkers program; presumably, the Senate will follow suit before they leave today.

From the comments made during the House discussion on this, it sounds like the program was wildly more successful than even reported yesterday–largely because (in spite of an arguably crappy design) it is working to do what it’s supposed to: get people to trade in old gas guzzlers for more efficient passenger cars. Here’s the early pitch from the program:

Early statistics from automotive dealers on the CARS Program, commonly known as Cash for Clunkers, show clunker consumers getting a 69% mile-per-gallon (mpg) improvement which saves them an average of $750 in gas bills a year by replacing their clunker with a new fuel efficient vehicle. "After gas and repair savings many consumers will spend less to drive a new car then they were spending to keep their clunker on the road," says Sharon O’Connell, the director of www.CashForClunkersInformation.org. "If consumers miss their old cruiser they can buy another one with the $750 they save in gas." The organization interviewed some of the largest dealers in the country who have been selling vehicles to clunker consumers for almost a month and their findings were released today in their "clunker report."

According to www.CashForClunkersInformation.org, 79% of clunkers being traded in so far are SUVs, trucks and vans with over 100,000 miles and most are being replaced with new passenger vehicles. The average age of a trade-in model is almost 13 years old, and the average odometer reading is approximately 138,000 miles. The most popular clunker trades are Chevrolet, Ford and Dodge and 84 percent of the new vehicles purchased are passenger cars.

In the sample, 64% of the government funded credits were for $4500 and 36% for $3500. "Lower priced cars have a better chance of qualifying for the larger $4500 rebate because smaller vehicles typically have better mpg ratings," adds O’Connell. The rare exceptions are hybrids that cost more but often qualify for the $4500 because of their higher mpg ratings. "The best deals for the Cash for Clunkers program are the less expensive vehicles that cost $10,000-$18,000. A list of these types of vehicles is available on www.CashForClunkersInformation.org."

Based on a 69% mpg improvement, www.CashForClunkersInformation.org estimates that personal fuel consumption could decrease by approximately 300 gallons per year, reducing personal fuel costs by almost $750 annually at average gas prices. "If this early trend continues for all of the 250,000 sales that are estimated to occur under the program, it will save consumers more than $187 million dollars in gas expenses while also helping the environment," says O’Connell. As a result, the US annual fuel consumption could decrease by approximately 75 million gallons, reducing spending by a total of nearly $185 million on gasoline(1), and cutting CO2 emissions by more than 655,000 metric tons.(2)

I’ll post more later about the one thing Republicans have found to grumble about: that dealers aren’t getting their money quickly enough (in a program that has existed for a week), and that there has been a significant rejection of claims (which sounds similar to regular rebate woes).

Clare McCaskill, herself from a car-manufacturing state, has her own gripe. According to McCaskill, "forever" is "one week."

clairecmcWe simply cannot afford any more taxpayr $ to extend cash for clunkers. Idea was to prime the pump, not subsidize auto purchases forever.

But for the moment, let’s just ignore McCaskill, sit back, and watch government stimulus working the way it’s supposed to work. 

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    • mataha says:

      Wonder how many of these clunkers also received the $25,000 Bush tax credit for SUV’s and trucks passed in 2003? These gas guzzlers were also eligible for accelerated depreciation. As a small business owner, I could have saved over a third of the costs for one of these monstrosities but instead bought a sensible mileage car. I would not have objected to this cash program if it had excluded any auto purchased that had received the Bush tax credit.

  1. JimWhite says:

    Looks like the whining from the Rethugs is going to produce enough hot air to offset the lowered emissions from the junked clunkers.

  2. klynn says:

    Sad that Claire cannot do the math and understand the average gas savings will, in turn, stimulate the economy.

    • Petrocelli says:

      … or that if we can get ten times the reduction in oil purchases through extending this program, that will further drive down the price of oil, which will save consumers and businesses more … savings which can go to purchases that will further stimulate the economy.

  3. Petrocelli says:

    Excellent program, critics notwithstanding …

    The two aspects I like the most are that cars with better mileage & emission controls are being sold and the people who buy pickups got a great deal. These are the folks who do renovations, plumbers, electricians and also farmers … well thought out program !

    Marcy, has anyone done an assessment of these various stimulus programs ? By that I mean, are there $$$ figures of how much economic stimulus comes from this and other programs ?

    • emptywheel says:

      dday has been saying the $1 billion has a $5 billion net effect. They do often say each dollar in auto is worth 5 in the economy, though that is the most aggressive number.

      Also, Claire McC has now revised to say she will study the bill and the program.

      • klynn says:

        For that matter, even if the “net” was 0, the gain on petroleum savings still stimulates the economy.

      • Petrocelli says:

        And add in the “stimulus effect” when others on the street see you driving a new car and go out to get one …

        Thanks Marcy !

      • Funnydiva2002 says:

        Too bad she couldn’t do that before she opened her big, fat mouth.
        Then again, she is a Senator. Brainless Bloviating seems to be a job requirement…

        FWDiva

      • thegris says:

        I think that would work great in big cities. So many people have cars that they don’t need.. some public transport credits would help. Even rental car credits.

        Less cars –> Nicer cities.

        • bobschacht says:

          Less cars –> Nicer cities.

          That would certainly be true for Honolulu, and for the whole island of Oahu.
          Its what happens when you discover paradise, and then invite 500,000 of your closest friends, and then…
          OMG! what happened to Paradise???

          Bob in HI

        • Teddy Partridge says:

          Oh, yeah, if people could take their car to a dealer and get $4500 in car-share credit, that would be wonderful and also enable the car-share folks to buy new cars. Ours are getting a little old in the tooth, frankly, and I’d like to see new memberships result in new cars. Drove a Jetta with 55,000 miles on it last weekend; not the usual rattle-free ZiPCar experience I’m used to.

  4. joejoejoe says:

    I’m happy the plan is working but it’s a mess of a design. I was doing some research for a friend who wanted to trade in her 1994 Pontiac under CARS which got a combined 20 mpg when it was brand new and she’s not eligible to participate in the plan, even if she gets a car that gets a huge increase in mileage. They should tweak future versions of this plan with some kind of a sliding scale so that old midsized clunkers aren’t squeezed out of the plan. The carbon score of that Pontiac was the same as eligible cars on the .gov website I checked.

  5. Mary says:

    I’m glad they have something that seems to be working on the stimulus front, but I think the legislators are going to get a very concerted effort back home and this youtube, of a soldier confronting McCaskill and the enthusiasm with which his rant is embraced there and in the comments is pretty disheartening on the health care front.

    http://www.youtube.com/watch?v…..re=popular

  6. rosalind says:

    ot: via TPM

    The White House announced today that President Obama is nominating Daniel Bogden to be U.S. Attorney for the District of Nevada, a post Bogden previously held from 2001 to 2007 before he was fired by the Bush administration.

    • rosalind says:

      this quote from salon popped out at me:

      The idea to nominate Bogden for his old job came from Senate Democratic leader Harry Reid of Nevada. “I just think it’s so unfair what happened to him,” Reid told Nevada reporters in March. “There was nothing bad about him. It’s just Karl Rove trying to get back at Nevada, I guess.” (emphasis mine)

      guess i missed the investigation reid launched to hold rove to account.

      • Teddy Partridge says:

        I wonder if there’s an aggressive potential USAttorney interested in investigating Reid’s family’s land deals, and this Bogden was keeping the lid on previously. Might also explain Rove’s reason for wanting Bogden gone, if he’s thick with Harry’s alleged crookedness.

    • Mary says:

      Added another: “All the people in our office who voted for Obama, which is a significant number, wanted change and hope for the future.”

      I guess the club is getting big enough, it needs t-shirts.

      I do like the way that Reid thinks Bodgen is a right that needs to be remedied, but Arar, el-Masri, the Iraq war, Bagram, bombed Pakistani civilians and children, children at GITMO, etc. – those are not really a big deal.

  7. Funnydiva2002 says:

    Um, Clare
    Wasn’ this program slated to go until November?!! How is another week or 10 days “Forever”
    Moran. Her local auto industry and dealers should crucify her over August Recess. If there’s any slack in the health care reform efforts, that is.

    FWDiva

  8. oldtree says:

    Look at this logically, it is a bailout and a bad one. Only rich can afford it, only the rich benefit.
    Some great plan?

  9. ezdidit says:

    Populist pragmatism, at long last!

    [Hyundai’s for half-price — oops, that rebate was supposed to be for American cars?????]