What Is the “Cash for Clunkers” Program?

What is the “cash for clunkers” program?

Even though unemployment numbers are higher than they’ve been in over twenty years, and people are watching their investments lose value faster than ever before, consumers may just get a huge break from the US government when they go to buy their next car.

It may seem counterintuitive to offer consumers a break on an item that the media would have us believe no one is buying, but let’s be real. People will always have a need for a new vehicle. To spark that interest, the Obama administration has invented an incentive, known as “cash for clunkers”, that would give consumers anywhere from $3,500 to $4,500 off the purchase of a new car — if they meet a few guidelines.

The United States House of Representatives has just approved the “cash for clunkers” legislation. This is great news, but not all that surprising — Democrats far outnumber Republicans in the House, and the legislation was expected to pass, even though Republicans seem to be doing all they can to take Obama out at the ankles. The “cash for clunkers” legislation will offer new car buyers up to $4,500 in incentives if they are willing to trade in their old model gas guzzlers for new environment friendly high mileage cars. The House voted 298-118 in favor of the bill — this represents a “yes” vote from all but nine Democrats, as well as “yes” votes from a measly 59 Republicans. It is difficult for political pundits to answer the question “Why did Republicans not back this legislation?” with anything but an anti-Obama position. However, with control of both the House and the Senate, Democrats shouldn’t have trouble passing just about whatever they want this term.

For consumers to earn “cash for clunkers”, the trade in vehicle must be rated at no more than 18 mpg in order to qualify, meaning “cash for clunkers” will benefit truck, SUV and van owners more than passenger car owners. What’s hilarious to many liberal bloggers is this — wouldn’t you say that most people who own low mileage SUVs are probably conservatives, represented in the House by the same people who attempted to keep “cash for clunkers” down? Regardless of your political opinion on the issue, you have to be optimistic about car dealers have the opportunity to churn up some business.

Further qualifications exist. If you’re buying a car that gets at least 4 mpg more, you’ll instantly get a $3,500 voucher — but it gets better. Pick a car that averages 10 mpg more than your old clunker, and you’ll earn an additional $1,000 credit. The total — $4,500 towards the purchase of your new gas sipping car.

The measure will now move directly to the Senate, where it is expected to pass. If the legislation passes the Senate, it will head back to President Barack Obama for his approval and signature. Obama has been all but a cheerleader for “cash for clunkers”. The program is expected to go into effect within 30 days of Obama’s anticipated signature, but will not be retroactive for car purchases made before that 30 days begins later this year.

There are some restrictions built into “cash for clunkers”. Trade-in cars must have been under insurance at some point during this past year, and trade in cars that are 25 years old or older are not eligible. In part, this will keep people from attempting to trade in any old rust trap they have sitting on cinder blocks in the front yard. The cash for clunkers program is not permanent — the current language clearly designates the program to last for exactly one year from the time of its inception, or “until Federal funding runs out”.

The House says it will spend about $4 billion that had been expected to be allocated toward a now unncessary war supplemental spending bill, rather than using previously allocated dollars. This could be the cause of conservative uproar — unfortunately, the money that was intended to move toward the military’s supplemental spending bill has been made obsolete by the approaching end to major Iraqi occupation.

Don’t worry about dealing with unwilling or scam happy car dealers, either. Dealers will be required to participate in the program by the government, and will also be required to prove that traded in vehicles have been crushed or shredded, and not resold to consumers.