‘Cash for clunkers’ popular, may become more restrictive

Program spends $1b in 1 week

Steve Hawley, Jul 31, 09.

The extremely popular “cash for clunkers” stimulus program, which provides subsidies to consumers buying more fuel-efficient vehicles, used up its $1 billion allotment in one week and may be extended in a more restrictive manner by Congress, according to the New York Times. The program provides consumers with $3,500 to $4,500 if they trade in old, inefficient vehicles for newer, more fuel-efficient models, and was supposed to last until November 1.

Friday afternoon, the House approved an additional $2 billion previously reserved for other energy efficiency programs. The Senate is expected to take up the measure next week, but some senators have called for more restrictions. Currently, eligible trade-ins must get less than 18 miles per gallon:

Under the program, a buyer who picked a car with a mileage improvement of more than four miles per gallon but less than 10 were eligible for $3,500; a buyer whose new vehicle was rated 10 miles per gallon or better than the old one was eligible for $4,500.

Senators Dianne Feinstein of California and Susan Collins of Maine want the mileage requirements increased, and they also want the program to extend to used cars as well as new cars.

Cash-for-clunkers has covered roughly 250,000 vehicles so far, and according to Rep. Ed Markey of Massachusetts, who helped create the original program, the average participant has gotten a 69 percent increase in fuel efficiency. Most of the trade-ins, he said, have been trucks, vans, and SUVs.

(Photo credit: phasmatisnox, released under GNU Free Documentation License)