From The Greenville News:
While the suddenly cash-strapped cash-for-clunkers program has been a big hit with car dealers and car buyers, it’s not popular with U.S. Sen. Jim DeMint.
“I just think this is a great example of the stupidity that’s coming out of Washington right now,” DeMint said on “Fox News Sunday.”
The money approved for the program to trade in old cars for more fuel-efficient new ones is about used up. The U.S. House of Representatives on Friday voted to add an additional $2 billion.
DeMint, who has been one of President Barack Obama’s more vocal critics, said Sunday he will try to defeat cash-for-clunkers funding when the measure reaches the Senate this week.
Obama said that going through the original funding so quickly shows that the program has “succeeded well beyond our expectations,” according to the Associated Press.
DeMint has a different view.
“The federal government went broke in one week in the used car business,” he said, “and now they want to run our health-care system.”
Aug. 2 (Bloomberg) — The future of the U.S. “cash for clunkers” program depends on the Senate backing a $2 billion infusion this week, with at least one Republican saying he was going to try to block the effort.
“We’ve got to slow this thing down,” Senator Jim DeMint, a South Carolina Republican, said on “Fox News Sunday.”
The House voted 316-109 on July 31 for an emergency measure adding $2 billion to the program aimed at reviving U.S. auto sales, after a burst of demand exhausted most of the initial $1 billion in less than a week.
Transportation Secretary Ray LaHood said in a C-SPAN interview Sunday he expects the current $1 billion in funding to be gone by the end of the weekend.
DeMint said he opposes the program because “we’re helping auto dealers while there are thousands of other small businesses that aren’t getting help.”
“We’re definitely going to debate it,” he said. “I heard that John McCain is going to stand up and try to stop it, and I’m going to work with him every way I can,” he said.
Senator McCain of Arizona is among Republicans who indicated they will vote against the measure. McCain has been “opposed to cash for clunkers from the beginning” because of the cost to taxpayers, Brooke Buchanan, his spokeswoman, said Friday.
“Any extension of the ‘cash for clunkers’ program must go further in advancing the goals of better fuel efficiency and greater emissions reductions,” Senators Dianne Feinstein, a California Democrat, and Susan Collins, a Maine Republican, said in a joint statement. “We will not support any bill that does not meet these goals.”
Named the Car Allowance Rebate System, the program provides credits of as much as $4,500 for the purchase of a new car when turning in an older vehicle to be scrapped.
Demand kindled by the clunkers program may push U.S. auto sales to a 2009 high in July, possibly signaling a bottom in the market’s worst slump since at least 1976. Sales have run at a seasonally adjusted annual rate of fewer than 10 million units since December. That pace trails last year’s total of 13.2 million and the 16.8 million average from 2000 through 2007.
From USA TODAY:
Cash-for-clunkers — officially the Car Allowance Rebate System (CARS) [is] credited with turning around business at dealerships across the country and resulted in Ford Motor’s first monthly sales increase since November 2007.
“Without cash-for-clunkers, we would not have had a year-over-year increase” in July sales, Ford Vice President Ken Czubay said Sunday.
CARS provides government discounts of $3,500 or $4,500 to people who trade in older vehicles with poor fuel economy for new ones that do better. The amount depends on how much better the new one is.
It’s “the stimulus program that has worked better than any other stimulus program,” Transportation Secretary Ray LaHood said on CBS’ The Early Show Saturday Edition.
The program’s success “seems to confirm a very large degree of pent-up demand” for new vehicles, Himanshu Patel, a JPMorgan auto-industry analyst, told clients in a note Friday in reaction to news that the program was fast running out of money.
He forecasts that automakers will sweeten their own discounts if the government doesn’t continue CARS.
That would be good for buyers and cash-strapped auto component suppliers but bad for automakers’ profits.
Senate opposition to giving CARS more money started to build over the weekend, setting the stage for a battle this week.
“It’s a successful government program … and it’s not broke, so why fix it?” says Bailey Wood, legislative director for the National Automobile Dealers Association, the dealers’ main trade group.
It supports dealers and automakers, and “the driving public (is) getting new cars, and this is a win-win for America. It’s a win-win for our economy,” LaHood said in an interview on C-Span’s Newsmakers program on Sunday.
LaHood said that an additional $2 billion “gets us through the month of August” and added, “I believe the Senate will pass this.”
Former Federal Reserve chairman Alan Greenspan said CARS “probably would have been a dud” six months ago. But its dramatic success “is a very important indicator that the state of confidence in the economy is beginning to pick up,” Greenspan said on ABC’s This Week Sunday.
In one short week, CARS has:
•Boosted showroom traffic 50% to 200%, dealers report, and some of that can be converted into sales. The program is “definitely a booster shot,” says George Martell, COO at Woburn Foreign Motors Group in Boston.
•Retired close to 250,000 fuel guzzlers and replaced them with vehicles that use less.
Hyundai, for instance, says that clunkers traded to its dealers have averaged 16 mpg in combined city-highway use, according to the government numbers used for CARS. New cars that customers bought averaged 24.5 mpg, a 53% increase.
Volkswagen spokesman Tom Wegehaupt says VW dealers have handled 2,050 clunker transactions. Three-fourths were for VW diesels. Those are some of the highest-mileage vehicles available in the U.S., scoring in the mid-30s in city-highway use.
“It’s the gift that keeps on giving,” says George Pipas, a sales analyst at Ford Motor. “We estimate fuel savings at about 3 million barrels of crude (oil) annually, forever. It might not sound like much, but it was accomplished in a week. This could be the biggest shot in the arm for energy conservation ever to come from inside the Beltway.”
•Put millions of dollars into city and state treasuries in taxes and fees for every new vehicle sold.
It’s a winner in the minds of many car buyers.
“I think it’s fantastic,” says Samuel Jenesky, 58, a computer specialist in Pittsburgh. “It’s helping to get this economy flowing.”