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Sec. LaHood: Cash For Clunkers Will End Before Labor Day


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The popular government "Cash for Clunkers" program will be shut down before Labor Day, but every dealer who's sold a vehicle under the program will be reimbursed as promised by the federal government, Transportation Secretary Ray LaHood said today.

On's "Top Line," LaHood said the department needs to wind down the program -- which provides vouchers of up to $4,500 to those who trade in older cars for more fuel-efficient models -- to be able to guarantee that all dealers will be repaid for the discounts they gave buyers.

"This is the most popular stimulus program going in America today. It's put show rooms -- it's made show rooms look like Grand Central Station," LaHood said. "We have enough people on board now, processing paper to get the backlog cleared out. Every dealer who has a deal in the pipeline will be paid. We have the money to pay them and they will be paid and we're committed to doing that."

A formal announcement on how and when the program will end will come from the department later today.

"Look -- we don't want to run out of money. And I want to be able to substantiate what I'm saying here. If you do a deal with us, you submit the paperwork, you will be paid," LaHood said.

"I'm telling you all and everybody that I can talk to: They will be paid. They're going to get their money," he added.

The program was authorized to last through October, and LaHood himself had said an infusion of $2 billion in additional funds should have been enough to keep the program on track through Labor Day.

But the entire $3 billion allocated by Congress for the program is now in danger of running out, with well more than 450,000 claims already having been submitted to the government. The Obama administration has indicated that it will not seek a third round of funding.

Car dealers have expressed frustration with the slow pace in processing reimbursements, and some have even said they aren't participating in the program any longer because of fear that they won't get the money they've been promised by the federal government.

LaHood said those concerns are unfounded -- and pushed back at suggestions that his department wasn't prepared for the deluge of claims.

"Nothing went wrong. This is a wildly successful program! In four days, when we had a billion dollars, we sold 250,000 cars. Now who's to say that's not successful?" he said. "That's loans that have gone out to credit unions and banks and salesmen that are making commissions, and it's the car manufacturers particularly -- GM that's saying they're going to call back people to make more cars. This is a win-win for people all over America. And for the economy.

LaHood also talked about a summit he's organizing to find ways to ban texting while driving.

"What I support is the elimination of texting while driving. If it were up to me and I could wave a magic wand -- and I can't -- that's what I do, that's why we're having the summit. So we can explore all of these ideas, some that have been introduced as legislation, others that have been talked about, but we should not allow people to text while they drive or allow them to be on a cell phone while they -- this is a distraction that has caused accidents, caused fatalities. We're in the safety business and we're going to really be about very strong safety measures."

(LaHood also guaranteed that he won't update his Fast Lane blog from behind the wheel.)

The secretary also said a Transportation Department inquiry into an incident where passengers on an ExpressJet plane were held on a runway overnight will wrap up tomorrow.

"This is an untenable situation. All of us that fly don't want to get stuck overnight and into the morning on an airplane. Some measures were taken but look, we'll have a lot more to say about this in the next day or so," he said.

You can watch the full interview with LaHood HERE.

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