Cash For Clunkers Extended (Updated)

Updated: On August 6th, the Senate passed a bill to add $2 billion dollars to the popular CARS program.

According to a New York Times article today, the U.S. House of Representatives passed an extension bill providing more money for the Obama Administration’s “Cash for Clunkers” program.

The Senate is likely to pass the same bill by Friday (although there have been several proposed amendments from various senators). The current auto trade-in program has been wildly popular, with $1 billion in government funds already used up. The extension bill promises to pump an additional $2 billion into giving new car buyers $3,500 to $4,500 in rebates when they trade in old, gas-guzzling vehicles.

So far, the C4C program has resulted in roughly 200,000 new car sales, with the rebates totaling $775.2 million, according to the Transportation Department. The Ford Focus is the best-selling new car among participants, though the other top four out of five are all foreign makes.

It seems like there are two ways of looking at this program. One way says that it is creating more demand for new cars, causing need for more production, and more work and jobs for U.S. autoworkers. The other way says this program is increasing the national debt at the expense of short-term economic benefits. I suppose either way, we are all paying for this program, but we might all indirectly benefit from the shot in the arm it is giving the auto industry.