Video: End of the road for Clunkers

  1. Transcript of: End of the road for Clunkers

    ANN CURRY, anchor: There is word from Washington that the cash for clunkers program will end on Monday, just four days from now. The popular, multibillion-dollar program , which has already been extended once, is coming to the end of the road less than five weeks after it began. NBC 's Tom Costello now joins us from Washington with more on this. Tom :

    TOM COSTELLO reporting: Hi, Ann. Good evening. It's likely to be a busy weekend at dealerships. Car owners can get up to $4500 for trading in a clunker for a new, more fuel efficient car. Well, at 8 PM Eastern time on Monday, all that application paperwork must be submitted. The program comes to an end.

    Unidentified Woman: Sounds good.

    Unidentified Man #1: Thanks for buying at Westfield Ford .

    COSTELLO: Calling it one of the most successful short-term economic stimulus programs, the White House today said it's time to start winding down its cash for clunkers program .

    President BARACK OBAMA: It has been successful beyond anybody's imagination.

    COSTELLO: Dealers and the government have been overwhelmed. As of today , the cash for clunkers program has recorded more than 457,000 dealer transactions, worth $1.9 billion in rebates.

    Ms. REBECCA LINDLAND (Auto Analyst): The benefits are really twofold. Get -- it's gotten the consumer back into the showroom, it's gotten dealerships in better financial condition and, of course , it's helped the manufacturers as well.

    COSTELLO: But the government admits it's processed fewer than half the rebate allocations, and many must be resubmitted by 8 PM Monday after the forms were filled out incorrectly, all of it leaving most participating dealers out thousands, even hundreds of thousands of dollars as they wait to get paid.

    Unidentified Man #2: Let me go and get the key.

    COSTELLO: In Sarasota , John Tubersky has sold some 50 cars under the program .

    Mr. JOHN TUBERSKY: We have well over a quarter million dollars right now invested. So we're -- we think that hopefully soon, you know, we'll start to get some more of that money . You know, we're confident that the government 's going to come through, but they've just been a little bit slow.

    COSTELLO: Again today the president insisted the dealers will get their money .

    Pres. OBAMA: I think this is actually a high class problem to have that we're selling too many cars too quickly, and there's some backlog in the application process. It is getting fixed.

    COSTELLO: Of the $3 billion budgeted for this program , the government has only paid out $145 million. Critics say the government should not be involved in this kind of a program , of buying used cars . They call it a giveaway. Ann , back to you.

By
updated 8/21/2009 5:40:38 PM ET 2009-08-21T21:40:38
Analysis

Expiring Monday, the Cash for Clunkers program encouraged more than a half-million Americans to dump their gas guzzlers for new cars and provided a much-needed, short-term boost to the U.S. economy.

Critics say that's hardly the whole story. They view the $3 billion program as an example of the Obama administration willingness to cherry-pick winners and stick taxpayers with the tab.

Though the merits and flaws will be debated for years, the early assessment has to start with the program's overwhelming popularity.

Car buyers will have their last shot to take advantage of the $3,500 or $4,500 incentives this weekend — the program ends Monday night. Through early Friday, it had spent more than $2 billion in federal money, accounting for sales of more than 489,000 new vehicles.

Beyond the individual sales, the program has led to notable — if perhaps temporary — economic gains. General Motors and Chrysler, fresh off government-led bankruptcies, have boosted production, along with Toyota, Ford and others. GM is rehiring more than 1,300 laid-off workers, Hyundai is bringing 3,000 workers back to an Alabama plant, and automakers are paying workers overtime to meet the demand.

President Barack Obama lauded the car program in an interview with radio talk show host Michael Smerconish on Thursday, calling it "successful beyond anybody's imagination."

Unless the final weekend turns into chaos, Obama can continue to cite the rebate system as a successful chapter of the government's recovery effort, which has faced criticism for being slow to generate road and bridge construction projects needed to rejuvenate the economy. The signs are apparent — busy car dealerships and plenty of Americans who know someone who has turned in his old vehicle for a new Ford Focus or Honda Civic.

Traded-in clunkers

"It wasn't from the same old playbook of ideas out there," said Paul Weinstein Jr., who served as chief of staff to President Bill Clinton's Domestic Policy Council. "That is the irony. This will be remembered in many ways more than the other types of programs that were included in the stimulus."

But conservatives have connected "Clunkers" to federal bailouts for GM and Chrysler, what they describe as a bloated and ineffective economic stimulus plan and the Democrats' plans to overhaul health care and the environment. The auto industry, they contend, has been the beneficiary of billions in taxpayer funds while plenty of other struggling industries have been forced to stand in line.

While small in comparison to other stimulus programs, Cash for Clunkers adds to the perception that Obama is simply trying to spend his way out of the economic downturn and let future generations deal with the consequences. The White House is expected to announce next week that the federal deficit will be a record $1.58 trillion for the current 2009 fiscal year, about $262 billion less than predicted earlier but still three times as large as last year.

"It fits into that theme of artificially trying to pump up the economy in the short run but in my view at the expense of long-term growth," said Chris Edwards, an economist with the libertarian Cato Institute. "It increases the government's debt and will probably, like those other temporary programs, produce higher inflation in the future."

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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