CNN "Newsroom" - Transcript

Statement

PHILLIPS: Time is running out on Capitol Hill for the government's Cash for Clunkers program. If the Senate doesn't vote on a $2 billion extension by Friday, the money now available runs dry.

The House has already passed a similar measure. Senate Majority Leader Harry Reid today actually warned colleagues, if they don't vote by Friday, he may keep them in session until they do. And that would mean they would miss at least part of their August vacation.

We've been asking you to send us your questions about Cash for Clunkers to "Mail to the Chief."

Joining us now live from Washington to answer some of them, Transportation Secretary Ray LaHood. Also joining us, Chief Business Correspondent Ali Velshi.

Mr. Secretary, let's start with you.

As you can imagine, we've got a lot of questions for you today, because this was a very popular program as soon as it began.

Doug Johnson actually sent a tweet. He said, "Cash for Clunkers is nice for people with old cars, but how does this not just cost the rest of us billions to buy the new cars?"

RAY LAHOOD, TRANSPORTATION SECRETARY: Well, look, the program was really designed to get gas-guzzling cars off the road and to get people into more fuel-efficient automobiles. And it also will be a lifeline for the automobile industry.

Both of those goals have been accomplished. The lion's shares of the cars that are being bought, the average miles are 25 miles to the gallon, and we know the ones that are being traded in are SUVs and trucks that get much, much lower mileage.

And we know that sales are off the charts all over the country. So, those two goals have really been met. And the structure of the program has really accomplished I think what Congress wanted.

PHILLIPS: And Ridener (ph) asks, "With so many poor people that have no way to get a job, how does the administration justify destroying all those cars?"

LAHOOD: Well, look, scrap yards all over the country are very, very happy. Their business has been hurt dramatically because they haven't had the kind of cars being towed in there. It's a boon for scrap yards and their ability to sell off parts from these cars.

And look, part of the economic recovery, people got -- 95 percent of the Americans got a tax cut. So, this program was really designed to get gas-guzzlers off the road, more fuel-efficient cars, and help a number of people in the automobile industry continue to have jobs. And that part has worked very well.

PHILLIPS: Ali, you got a thought?

ALI VELSHI, CNN SR. BUSINESS CORRESPONDENT: Yes.

Mr. Secretary, good to talk to you.

Listen, here's the thing. As a program, it's worked very effectively. It's actually had a better-than-expected result in pushing up fuel efficiency of the cars that are being bought. It's even working, as you say, as a stimulus program. Ford says it sold more cars in a month than over two years.

Here's the problem. I think this is what's having it held up in the Senate. How do we pay for this?

It's remarkably successful as a program. There's no question about that. And I have to say, some of us were doubters. But how will it be paid for? Whose money is this that pay for this money that gets given to people who trade their clunkers in?

LAHOOD: The House passed a bill with well over 300 votes, which is a huge vote, by transferring money from the energy portion of the economic recovery. They transferred $2 billion from the energy portion over to this program. That's what we are asking the Senate.

I believe the Senate will do that, which will be an identical bill that the president can sign. So, ,the money is being transferred from a bill that's already been passed by Congress as a part of economic recovery.

PHILLIPS: Well, here is a good question. Broken -- you've got to love that name -- says, "Is running out of money an indication of success or failure?"

Mr. Secretary?

LAHOOD: A huge success. A huge success.

Over $700 million has been spent on the program. Almost 200,000 new automobiles, fuel-efficient automobiles that average 25 miles per gallon, and the lion's share of vehicles being traded in are trucks and SUVs. This is a wildly popular program and enormously successful and it helps many segments of our economy.

PHILLIPS: Well, here's somebody with a specific. Allyson wants to know -- or a specific point here about this -- Allyson wants to know, "Why is it that your registration and insurance have to be current for the 12 months prior to turning the car in? We are ineligible for the program because we had an insurance lapse temporarily after I lost my hours at work. This polity prohibits some people from taking advantage of the program. And for what?"

LAHOOD: Look, there are very few guidelines for this program, but you do have to show ownership so you don't have people bringing in cars off the street or something, you know, or there's a lien against it and they don't really own it. And you have to show proof of insurance. You have to have insurance on these automobiles.

Look, there aren't that many requirements. There's not that much paperwork here.

(CROSSTALK)

PHILLIPS: But let me ask you, why 12 months? That's kind of a long time.

LAHOOD: It's not a long time. I mean, if you haven't owned a car for 12 months, it makes you kind of wonder who owned the car before and how you were able to purchase it. It was one of the metrics that was put in there by Congress.

Look, it's not that big of a deal, really. And if we sold -- look, if we sold over 200,000 cars, it means 200,000 sellers have been able to verify three or four different things.

VELSHI: So, Mr. Secretary, I mean, really, the idea here was to avoid a new market and people going and buying scrapping cars so that they could turn them in and get $4,500 off the purchase of a new car. You were trying to avoid it becoming a new business for people.

Am I right?

LAHOOD: Yes, that's right.

VELSHI: OK. I want to ask you one other thing, Mr. Secretary.

You know, we saw greater gains if fuel efficiency when gasoline hit $3.55 a gallon, then $4 a gallon. I mean, the spike in gas did more for energy conservation than anything Congress has done in a quarter century. And now we've got this program.

It makes you think that the low-hanging fruit seems to be working better in terms of saving energy and saving gasoline than complicated legislation.

LAHOOD: Well, this legislation is not complicated. I don't know if that's what you were implying.

VELSHI: Yes.

LAHOOD: This is pretty simple. No, I mean, it really is.

You take your car in, and if you get 18 miles a gallon or less, you get $3,500 or $4,500, particularly if you buy a car that gets better gas mileage. Almost all the cars that are being manufactured today get much better gas mileage than 18 miles per gallon, and we know the average that's being sold of the over 200,000 cars that have been sold are averaging about 25 miles a gallon.

VELSHI: Wow.

LAHOOD: This is a win-win for Americans. It really is.

PHILLIPS: Well, that's what this one tweeter is asking -- "What is Cash for Clunkers really going to do for the economy? Is it a long-term plan or just a short-term boost? And can we really afford it?"

LAHOOD: Well, it's helped a lot of car salesmen, mechanics and automobile dealers keep their doors open. It's helped Americans buy cars. It's helped the car manufacturers. It's helped the American worker who makes the cars.

This has helped an enormous number of people around our country keep their jobs, hold on to their jobs. And in many instances, come back to work, in the instance of car dealers who have to call salesmen back to work.

PHILLIPS: Secretary Ray LaHood, Ali Velshi, thanks, guys. Good conversation.

VELSHI: Pleasure, Kyra.

LAHOOD: Thank you.

PHILLIPS: Appreciate it.

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