House Quickly Sends $2 Billion More to ‘Cash for Clunkers’

The "cash for clunkers" rebate program, which promises new auto buyers up to $4,500 for fuel-efficiency upgrades as small as 2 miles per gallon, is back to life after burning through $1 billion in taxpayer cash.

Minutes ago, the House approved $2 billion more in auto rebates by transferring cash that was already headed for loan guarantees at the Department of Energy — averting the need to add the new spending to the deficit. The vote was 316-109.

The last-minute race to keep auto-industry benefits alive, which President Obama is strongly backing, now moves to the Senate. A bipartisan group there is already threatening to oppose new "clunkers" money unless its fuel-efficiency requirements are improved and used cars are approved for purchase rebates.

Right now buyers can get a $3,500 discount on new cars that get as little as 22 mpg. Small truck buyers are only required to improve 2 mpg to receive the same rebate, achieving a combined city and highway efficiency of 20 mpg.

An early version of the plan would have allowed the rebate value to be taken in transit coupons, but the DOT said earlier this week that no such option would be available.

Meanwhile, one environmental group that supported a stronger version of the "clunkers" plan that became law is now urging members to encourage the purchase of more efficient cars than the minimum.

"These are taxpayer dollars to help sell new cars," the Sierra Club wrote to its members. "It is up to consumers to put these dollars toward the purchase of highly efficient new vehicles not just a new guzzler."

Statistics on the early performance of the "clunkers" program, released by Rep. Ed Markey’s (D-MA) office, follow after the jump.

Late Update: 14 Democrats joined 95 Republicans in opposing the $2 billion. The 14 were Reps. Earl Blumenauer (OR), Stephanie Herseth Sandlin (SD), Brian Baird (WA), Lloyd Doggett (TX), Kurt Schrader (OR), Scott Murphy (NY), Jim Marshall (GA), Gabrielle Giffords (AZ), Allen Boyd (FL), Harry Mitchell (AZ), John Tierney (MA), Collin Peterson (MN), Jared Polis (CO), and Ann Kirkpatrick (AZ)

  • During the week that
    the program was launched, GM’s small car
    sales increased 54.8 percent over the preceding week.
  • The leading Ford
    vehicle being purchased under the program is the 28 mpg Ford Focus at nearly 30
    percent of all Ford sales.
  • Toyota
    reports that 78% of their "cash for clunkers" volume were the Corolla, Prius, Camry,
    RAV 4 and Tacoma,
    with a resulting average of 30 mpg.
  • Hyundai is reporting a
    59 percent increase in fuel economy compared to the old vehicle — which
    averaged 140,000 miles.
  • Kenney

    Wow, the statistics at the end of this article are actually quite encouraging. It’s good news, all things considered.

    Nonetheless, I think cash-for-clunkers is still a bad idea, even if it only gave rebates for cars that got a minimum of 40 mpg. Overall, when the government spends money, it should be GIVING us stuff (infrastructure, security, health care), not inducing us to BUY stuff. Every time the government spends our money to make us buy things (ugh, the stimulus rebate checks under Bush…), it never works out. It’s always a bailout for an industry, not a stimulus.

  • urban dweller

    As the name implies, it’s a bailout rather than any sort of meaningful incentive to improve efficiency.

    It’s called cash for clunkers, but the fuel efficiency requirements for the replacement vehicles means we’ll still have plenty of gas guzzlers on the road, just newer ones.

    I wish we could participate in this program… but our well maintained 1994 subaru with 186000 miles on it does not qualify. Average mpg for this car is 22mpg according to the EPA, this is too high for the cash for clunkers program which only provides cash for vehicles that get 18mpg or less.

    My understanding of this is that someone could trade their old vehicle in for a new one that only gets 22mpg combined, and still receive $4500.

    So yes, I do think it’s a bailout.

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