CARS, Cash For Clunkers Receives $2 Billion in Additional Funds

By Eric Loveday

Eric Loveday

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Eric Loveday is a car enthusiast with a love for everything automotive. He purchased a 1970 Chevelle at age 16, quickly outgrew its dated engineering... More

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1,797 views Jul 31, 2009

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The CARS program's tremendous success depleted funds in just days.  Yesterday we reported that the program had been suspended due to lack of funds.  Well all of that has changed today as the U.S. House gathered for an emergency vote to put an additional $2 billion into the program.

The unexpected demand for the program created a budget shortfall.  Initially, the program was intended to run through November or until funds were depleted, nobody expected this to last just days after the programs official guidelines were released.

With House approval of additional funding, all that is needed is a Senate vote on the bill which is expected next week.  President Obama said he was "very pleased with the progress the House and made" and noted that the administration is "working with Congress to ensure the program can continue."

The vote in the House can in with a strong favor for adding additional money to the program at 316 votes for and 109 votes against.  The additional funds will come from a Department of Energy fund which was intended to be used for loans to energy projects, but was not to be distributed until next year.

According to the White House press secretary, the CARS program will continue on with no interruptions and they await likely approval of the bill by the Senate.  The press secretary Gibbs said, "If you were planning on going to buy a car this weekend, using this program, this program continues to run.  If you meet the requirements of the program, the certificates will be honored."

The CARS program has launched auto sales at many dealerships to some of the highest levels they have seen in years.  According to some analysts, auto sales in July and August could top all other months this year, signaling a rise in this slumping sector.

Though the Senate is expected to pass the bill for additional funding, there are sources that suggest the Senate may push for more efficient cars to be purchased under the program.  Many Senators have suggested that they would like to see cars purchased with much better fuel economy required by the program.  It would be a big lift to the hybrid market if they did increase the required mpgs of new vehicles purchased under the program.

We will update you again after the Senate vote is in, but for now the program will continue on as is and the clunkers will still be pouring in.

Source:  Bloomberg