Yesterday, the U.S. House of Representatives approved a bill to infuse an additional $2 billion into the Car Allowance Rebate System (CARS) – commonly referred to as the "Cash for Clunkers" program.
The House rushed to pass the bill after U.S. Transportation Secretary Ray LaHood reported that the program was "running out of money."
If approved by the Senate, the additional funding will be paid for from the $787 billion Economic Stimulus bill which was passed earlier this year in February.
The Obama administration – as well as some members of Congress – are hailing the "Cash for Clunkers" program a great success.
According to an article from Reuters, President Obama referred to the program as "… a boon to the economy."
The program was originally intended to be operative through until November 1st. However, with so many folks taking advantage of the up to $4,500 rebate all at once, the program appeared to have already run out of money.
At first glance, it certainly seems that the program has been successful. In fact, is seems that it has been far more successful than anyone in Washington had foreseen.
I wonder, though, if the "success" might end up producing some hidden and unintended consequences somewhere down the road for those who have traded in their "clunkers."
The Reuters article mentioned that,
"The U.S. Department of Transportation formally started collecting data and approving vouchers this week, but dealers were able to offer incentives beginning July 1.
Government and industry officials estimated that sales of nearly 250,000 vehicles have been made over the past month."
Admittedly I’m guessing – but I have doubts that every one of the folks who has purchased one of the estimated 250,000 vehicles sold had the cash on hand to pay the difference between the rebate amount and the actual sale price of the vehicle. That would mean that at least some of them had to acquire financing. And, having to get financing means getting into debt.
I realize that the purpose of the "Cash for Clunkers" program was partially meant as a way to motivate consumer spending – and as a result – give the economy a "jump start." But, considering the state of the nation’s economy and the continuing rise in unemployment, getting further into debt might not necessarily be a good thing for many Americans.
Also, I wonder how many of the folks who went out and acquired financing for their new vehicles might end up defaulting on their payments and subsequently having them repossessed.
Don’t misunderstand me.
I think it’s good that some folks who otherwise might not be able to afford it, are being given an opportunity to get newer vehicles that have better gas mileage.
However, I can think of something which a lot of folks need so much more desperately than a new car: affordable housing.
If Congress was able to move at break-neck speed to come up with and fund the "Cash for Clunkers" program, how is it that they haven’t been able to move just as quickly to come up with a program to help folks get into affordable housing?
There are in our nation, homeless who are working. That makes them tax-payers.
Lack of affordable housing and a lack of adequate government funding for the federal low income housing program – also known as "Section 8" – makes it more difficult for them to acquire housing and keeps them homeless.
Furthermore, there are some folks who are finding it difficult to pay for the housing they currently have. Unless there are affordable housing units available that they can "down-size" to if needed, they potentially face becoming homeless.
I can understand those in Washington patting themselves on the back for the seemingly apparent success of the "Cash for Clunkers" program.
Now, if they could be just as successful at helping our nations’ homeless get off of the streets and into permanent housing – that would be something to "write home about."
What I’m hoping is that none of the folks who’ve gotten themselves into debt buying vehicles because of the "Cash for Clunkers" rebate will end up living in those very same vehicles.