Totally Clunked Out

Government couldn’t keep up with the private sector once again this week as the “Cash for Clunkers” program had to be suspended due to pending insolvency – after only a week in operation.

What happened? Basically, sales of vehicles are being made faster than the U.S. Department of Transportation can process them.

From Business Week:

The White House was working feverishly Thursday night to find a way to avert a suspension of the program.

The controversial program gives vehicle buyers either $3,500 or $4,500 depending on the vehicle being traded in and the vehicle purchased. Dealers began making sales based on the extra rebates earlier this month, weeks before the government began processing transactions last Friday. The backlog swamped the DOT’s ability to process the sales.

A suspension of the program would be a blow to a beleaguered auto industry, which just began seeing an upturn in sales thanks in part to the program.

An estimated 23,000 vehicles have currently been purchased under the $1 billion program with another 25,000 sales yet to be processed by DOT officials. An additional 200,000 sales may have been made by dealers using the promised incentives – which is what has the feds worried as that would obviously push “Cash for Clunkers” over its limit.

Update – Bloomberg is now reporting that “Cash for Clunkers” may get a $2 billion bailout from the  federal “stimulus.” Stay tuned …

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