The Car Allowance Rebate System (CARS), better known as the Cash for Clunkers program, was designed to stimulate auto sales and aid the environment by providing government rebates of $3,500 to $4,500 to help consumers purchase new fuel-efficient cars and trucks to replace their old low-mileage vehicles.
Cash for Clunkers quickly became wildly popular and controversial. Congress initially funded Cash for Clunkers with $1 billion, which was expected to keep it operating smoothly for about four months, but so many consumers hurried to auto dealerships to take advantage of the rebates that the program was running out of money by the end of the first week.
Congress responded by allocating another $2 billion, enough to extend the program for a few more weeks and to help consumers purchase another half million new fuel-efficient vehicles.
Debate over refinancing Cash for Clunkers raised questions of whether the program would continue to stimulate auto sales even after the government stops subsidizing new-car purchases, whether it encourages consumers to assume too much debt during a recession, and whether the economic and environmental benefits justify the cost to taxpayers-and all within two weeks of the program's official start date.
Get details and learn more about key issues:
Cash for Clunkers: Frequently Asked Questions
Includes detailed explanations of how Cash for Clunkers works as well as program eligibility, benefits, drawbacks, costs, duration, and what happens to old vehicles that are traded in.
Track the latest developments:
August 6, 2009
Senate Votes to Extend Cash for Clunkers Program
Faced with the August congressional recess, Senate leadership scrambles to beat down efforts to modify Cash for Clunkers (which would delay the vote by several weeks and possibly kill the program), and pulls together enough votes to allocate another $2 billion and extend the program.
August 6, 2009
Will Cash for Clunkers Lead to Stimulus or Slump for Auto Dealers?
The promise of government rebates to help consumers purchase new fuel-efficient cars and trucks is a financial boon to auto dealers nationwide, but will sales continue after the government program ends?
August 1, 2009
House Votes to Refuel Cash for Clunkers Program with Another $2 Billion
The House responds to consumer demand by voting to allocate another $2 billion to keep the Cash for Clunkers program running-at least through Labor Day-but the Senate raises serious questions about the wisdom of investing more money in the program unless changes are made.
July 30, 2009
Congress Suspends Cash for Clunkers Program-After One Week>br> Unexpected high consumer response to the Cash for Clunkers program, combined with paperwork and Web snafus, causes a short-term panic among government officials who fear auto dealers and their customers may have burned through four months worth of funding in less than a week.
July 24, 2009
Who Does the New Cash for Clunkers Program Really Help?
The new Cash for Clunkers program gets under way amid low expectations about the economic and environmental benefits it can provide.
June 22, 2009
Congress Passes Cash for Clunkers Bill in Need of Repairs
The Cash for Clunkers bill that Congress finally passes in late June appears to deliver less-for both the environment and the economy-than originally intended.
June 10, 2009
House Passes Cash for Clunkers Bill; Taxpayers are Left to Wonder Why
The House passes Cash for Clunkers legislation that differs sharply from the original proposal and promises far fewer benefits in return for the billions of dollars taxpayers are being asked to invest.
June 8, 2009
Has Cash for Clunkers Legislation Stalled in Congress?
By early June, political disagreements about how to balance the economic and environmental aspects of the proposed Cash for Clunkers program threatens to create an impasse that might derail the legislation.