House Passes Bill to Prolong 'Cash for Clunkers'

The U.S. House of Representatives passed a bill Friday afternoon to give the popular, week-old Car Allowance Rebate System (CARS) program, or “Cash for Clunkers”, an additional $2 billion.  The program, which provides credits for the owners of old gas guzzlers to purchase newer, more fuel-efficient cars, had almost run through its initial $1 billion allotment.

Today’s congressional action would give the CARS program a chance to continue through its November 1 expiration date.

The money will come from funds in the already-passed economic stimulus package that were intended for energy loan guarantees. Congress will seek to replenish the energy program at a later date.

“If you were planning on going to buy a car this weekend, using this program, this program continues to run,” White House press secretary Robert Gibbs said Friday. “If you meet the requirements of the program, the certificates will be honored.”

Senate leaders hope to bring the bill up next week. Conservatives who opposed both the original cash for clunkers program and the stimulus package as a whole may seek to slow the process, as might liberals who want the program’s mileage standards to be revised upwards.

Two members of the Michigan congressional delegation said the administration had told them it would continue to honor exchanges made under the program “until further notice.”

Lawmakers also want problems fixed in the way the program has been administered and and to ensure auto dealers are being reimbursed in a timely fashion. Technical glitches have made it difficult for the administration to know exactly how many exchanges have taken place and how much money has been paid out to date.

Previous Tax Topics entries about the CARS program:

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