Congress Likely to Bail Out Cash for Clunkers

(MoneyWatch)  The dust, or maybe it's tailpipe exhaust, is beginning to settle, and it seems likely that Congress will approve another $2 billion for the bankrupt Cash for Clunkers program. The House voted 316-109 to make that happen this afternoon. "Cash for Clunkers may have run out of cash, but America's consumers haven't run out of clunkers," said Congressman Ed Markey (D-MA), who voted to approve the funds. The Senate (where the outlook is less certain) votes next week.

The program was thrown into chaos when the end of funding approached. For instance, this news report would lead the public to believe the program had ended, when in fact it lives on: I predict Congressional approval and a last-minute save of the program without a suspension, but there are other questions looming: For instance, how long will the additional $2 billion last? Many are predicting it will be gone before the end of August--especially considering the great publicity (not all positive, but publicity nonetheless) that the program is getting right now.

John McEleney, chairman of the National Automobile Dealers Association and a GM, Toyota and Hyundai dealer in Iowa City, told me that the association was "really surprised" by how fast the cash evaporated. "It didn't last a week," he said. "Of course, business has been picking up in the last few weeks, but we have been experiencing 40-year lows in sales."

Another big question is whether Congress would fund a third extension of the program, especially if the economy is showing solid signs of recovery when the $2 billion starts to run out. At that point, America's star clunkers will have had their 15 minutes and they'll go back to being what they've always been--America's most unwanted gas guzzlers.

Photo: Flickr/superterrific