How Much Will the Cash for Clunkers Program Cost Taxpayers?

Question: How Much Will the Cash for Clunkers Program Cost Taxpayers?

Cash for Clunkers is a federal program designed to stimulate U.S. auto sales and help the environment by providing an economic incentive for consumers to replace old, low-mileage vehicles with new, fuel-efficient models that are safer and emit less pollution and fewer greenhouse gases.

Answer: Even though Congress passed Cash for Clunkers legislation in June 2009, details about the cost of the program and how the government will for any additional extensions are still a little sketchy.

With consumers receiving vouchers worth $3,500-$4,500, depending on the fuel mileage of the new vehicle they buy compared with the old car or truck they decide to trade in, the total cost of the Cash for Clunkers program could be anywhere between $3.5 billion and $4.5 billion if all vouchers were distributed.

Yet, in passing the final bill, Congress provided only $1 billion in funding, which was supposed to be enough to keep the Cash for Clunkers program rolling until Nov. 1, 2009. Consumer response to Cash for Clunkers was so enthusiastic, however, that the program was running out of money less than a week after it started. Congress responded by allocating another $2 billion, which came out of the Energy Department's loan fund. That money was expected to keep the popular program running through Labor Day.

If Congress decides to extend the program again, it will have to find more money. Some of that additional cash may come from the $787 billion economic stimulus package that was orchestrated by the Obama administration, passed by Congress, and signed into law by President Barack Obama in February 2009.

Cash for Clunkers FAQ:

• What is the Cash for Clunkers Program?
• How Does the Cash for Clunkers Program Work?
• What are the Benefits of the Cash for Clunkers Program?
• What are the Drawbacks of the Cash for Clunkers Program?
• Who is Eligible for the Cash for Clunkers Program?
• How Much Will the Cash for Clunkers Program Cost Taxpayers?
• What Happens to Old Cars Under the Cash for Clunkers Program?
• How Long Will the Cash for Clunkers Program Last?