At a recent 4-year-old’s birthday party, a friend’s husband leaned across the Disney princess birthday cake to ask that question you have probably never gotten over princess birthday cake:  So what do you think of Cash for Clunkers?  (Hey, it beats the ocean-bottom pressure of “So do you think your boyfriend is the one?”)  This was the first I had heard of Cash for Clunkers.  And as a greenie in the market for a new car, I was really excited to hear the details.  My friend’s husband explained that if you traded in your old car, you could get $4500 from the government towards a new one.  How cool is that?  I promised to check into this program.  Let’s just hope I didn’t forget about it.

Luckily, the world of 24 hour media responded, and forgetting about Cash for Clunkers became virtually impossible.  Why?  Because everyone and their grandmother rushed to take advantage of the voucher.  And pundits exploded discussing the best program to come out of the White House this year, and/or the New Deal propaganda that was going to end us all.  But what really is Cash for Clunkers?  And what’s the latest? 

First, the background on this deal.  Officially, it is known as the Car Allowance Rebate System (CARS), a $1 billion federal program signed into law by President Obama on June 24, 2009.  It is modeled after several successful programs in Europe, and it is meant to encourage consumers to trade in less fuel-efficient vehicles for those that get better fuel economy.  This is done by giving a credit voucher of either $3,500 or $4,500 towards the new car.  This program also includes “some very large vans, SUVs and pickup trucks irrespective of their fuel economy.”  Chrysler even upped the stakes by offering an additional rebate of $4500 to those seeking to trade in.  The money is coming from cash from the already-passed economic stimulus account that “had been set aside to subsidize renewable energy.”

At a recent 4-year-old’s birthday party, a friend’s husband leaned across the Disney princess birthday cake to ask that question you have probably never gotten over princess birthday cake:  So what do you think of Cash for Clunkers?  (Hey, it beats the ocean-bottom pressure of “So do you think your boyfriend is the one?”)  This was the first I had heard of Cash for Clunkers.  And as a greenie in the market for a new car, I was really excited to hear the details.  My friend’s husband explained that if you traded in your old car, you could get $4500 from the government towards a new one.  How cool is that?  I promised to check into this program.  Let’s just hope I didn’t forget about it.

Luckily, the world of 24 hour media responded, and forgetting about Cash for Clunkers became virtually impossible.  Why?  Because everyone and their grandmother rushed to take advantage of the voucher.  And pundits exploded discussing the best program to come out of the White House this year, and/or the New Deal propaganda that was going to end us all.  But what really is Cash for Clunkers?  And what’s the latest? 

First, the background on this deal.  Officially, it is known as the Car Allowance Rebate System (CARS), a $1 billion federal program signed into law by President Obama on June 24, 2009.  It is modeled after several successful programs in Europe, and it is meant to encourage consumers to trade in less fuel-efficient vehicles for those that get better fuel economy.  This is done by giving a credit voucher of either $3,500 or $4,500 towards the new car.  This program also includes “some very large vans, SUVs and pickup trucks irrespective of their fuel economy.”  Chrysler even upped the stakes by offering an additional rebate of $4500 to those seeking to trade in.  The money is coming from cash from the already-passed economic stimulus account that “had been set aside to subsidize renewable energy.”

And how to tell if your car qualifies?  This is where we cue mass confusion.  Here’s an example.  If your passenger car gets less than 18 mpg, you new vehicle must be mileage of 22 mpg and your new vehicle’s mpg must be higher than your trade-in’s mpg by 4 to 6 mpg.  Still with me?  If not, you can also use this handy calculator.  

So as long as you have your mpg stats right on your car, you’ll be fine, right?  Wrong.  Suddenly, companies are debating their vehicle’s mpg statistics.  A car shopper emailed CNNMoney.com to complain that he went to the Environmental Protection Agency's fueleconomy.gov on August 1^st to double-check the fuel economy rating for his 1987 Mercury Grand Marquis.  According to the car shopper,   

When he had visited previously, the car's combined city and highway fuel economy was rated at 18 miles per gallon, making it eligible for the program. But on Saturday, he found something different: The fuel economy for his car had been raised to 19 mpg -- one mile per gallon over the maximum fuel-efficiency allowed under the Car Allowance Rebate System (aka Cash for Clunkers). As a result, he became ineligible for a trade-in credit worth up to $4,500. 

So there has been some confusion.  Nonetheless, the program has steamrolled forward.  As of July 29^th, the week-old program had handed out $35 million of the $1 billion allocated by the government.  ABC News reported that 8,000 deals were made in the first week alone.  The Ford Focus had taken “top honors” as the vehicle most purchased with the vouchers, rounded out by the Toyota Corolla, Honda Civic, Toyota Prius and Toyota Camry.  (It should be noted that Chrysler stopped their rebate once the popularity of the program took off.)  

And  car makers have enjoyed a huge boom – though some have debated it is marginal.  I recently awoke to a story on NPR discussing the joy of Detroit at this much needed cash-infusion, though some pointed out the numbers are still nothing compared to what we saw during the boom.  (Probably because we’re in a Recession – but that seems beside the point to the naysayers.)  Others have pointed out that most of the money is going to Japanese carmakers.  Though isn’t it going through the strapped American car dealers first?

Negative press has continued.  Glenn Beck recently revealed that Cash for Clunkers is a New Deal/Nazi Government Conspiracy to gain access to your computer.  And the AP reports that “the entire Clunkers program had the same environmental effect as stopping all power use in the U.S. for a mere three hours.”

Despite the conspiracy theories, as of August 5^th the government has spent $775.2 million of the $1 billion fund, accounting for nearly 185,000 new vehicles sold.  the House had approved an additional $2 billion for the program – and currently, this is waiting for the Senate’s approval.  Senate Majority Leader Harry Reid had said on August 4