Cash for Clunkers Programs Suspended

The popular Cash for Clunkers program may be suspended indefinitely. I know, it’s not a real estate topic. But it’s within the realm of personal finance, and it’s an interesting subject. So here’s what you need to know about it:

In June of this year, the government launched a program commonly known as Cash for Clunkers — a clever strategy to accomplish two goals at once. It would help struggling auto makers reduce their inventories by selling cars, and it would put more Americans into fuel-efficient cars. Thus, it had both economic and environmental benefits. Smart, right? If only some money had been allocated for the program, we’d be in great shape.

The program was supposed to run through November of 2009, but the latest word is that Cash for Clunkers has been suspended for an apparent lack of funding. Here’s a bit of background on the Cash for Clunkers program and its current status.

Details About the Cash for Clunkers Program

The official name of this program is the Car Allowance Rebate System, or CARS. It was signed into law last month, apparently before proper funding had been assigned. The common name of the program is Cash for Clunkers, because that’s exactly what takes place. The program encourages drivers to trade in their old (less fuel-efficient) cars for newer (more fuel-efficient) vehicles. It offers an incentive to the folks who trade in the old for the new, in the form of a credit up to $4,500 off the price of the new car.

Before being suspended, Cash for Clunkers was intended to run from July 1 to November 1 of this year — or until the funding dried up. As it turns out, the initial funding did not even last a month.

Why It’s Possibly Being Suspended

Basically, a good plan was created that won popular support among lawmakers and auto industry officials. It was rushed into passage before funding had been fully allocated. I also think that Congress and the White House underestimated how popular this program was going to be. As you probably already know, the Internet, TV and radio are all buzzing about the Cash for Clunkers programs — and now there’s just as much buzz about it being suspended for funding problems.

Is there a future for the Cash for Clunkers program? In the words of Senator Carl Levin, that “depends on whether the administration can find some money.” But if history has taught us anything about government programs, it is this. When something becomes wildly popular among the American people, you can also “scrounge up” some money from somewhere. Time will tell.

I’ll keep a close watch on Cash for Clunkers being suspended (or not) and update this blog entry as needed.