Cash For Clunkers: Success Has A Price

The government's "cash for clunkers" program has turned out to be more popular than General Motors. So many people have taken advantage of it, the program almost ran out of cash just a week after it launched. Host Scott Simon talks with NPR news analyst Juan Williams about the government's "cash for clunkers" program, and whether its unexpected popularity will help or hurt the Obama administration.

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SCOTT SIMON, host:

The government's Cash for Clunkers program, where car owners can get up to $4,500 for trading in their old cars for new, more fuel-efficient ones, has turned out to be more popular than General Motors. So many people have taken advantage of it, the program almost ran out of cash just a week after it was launched.

And yesterday, the House voted to pump $2 billion in emergency funds into the program. That money would come from the economic stimulus package. The Senate's expected to take up the measure next week. Our friend, NPR News analyst Juan Williams, joins us. Morning, Juan.

JUAN WILLIAMS: Good morning, Scott.

SIMON: And this is being seen, obviously, as a very successful program. People have been flocking to dealerships to trade in their cars. But another $2 billion had to be spent - come from the U.S. Treasury - very quickly. So is there a cost for this kind of success?

WILLIAMS: Well, actually, the money already exists. As you say, the money was there as part of the stimulus package. This literally comes out of the Energy Department Loan Fund but the idea there was, of course, to stimulate the economy. And if you're talking about short-term stimulus, wow, this looks like a wild, wild success.

So on that level, you can't beat it but the problem is, it's got to also be approved by the Senate next week, and there you see senators already talking about tightening those fuel economy standards. So they may change the terms of the deal going forward. But for right now, over the weekend, the White House says go out and buy a car, and the car dealers are saying come on in.

SIMON: What does it mean that you have a government program with projected costs and they underestimated the projected costs?

WILLIAMS: Right. They didn't understand how popular the program would be. Car dealers could have made the offer to you, Scott Simon, as early as like, July 4th weekend.

SIMON: Yeah.

WILLIAMS: But…

SIMON: If I had a driver's license, they could make that offer to me, yeah.

WILLIAMS: Well, they could give you the scooter, they can give you the scooter.

SIMON: Yeah, a scooter I can get.

WILLIAMS: Yeah.

SIMON: Actually, I have nothing to trade in for $4,500, but I take your point. Go ahead.

WILLIAMS: Yeah. And so, but now they actually have started applying for the government money - the rebates coming from the government, and the application process is slow. And so that creates a problem. And of course, much of this is attached to the whole notion of consumer confidence. You just heard John Ydstie talking about the economy looking - it's recovering.

The slowest part of the recovery so far is that consumers aren't spending because more people are saving, thinking we're not sure about where this is going, anxiety over holding onto a job, paying big bills.

So this is actually good news. But as you say, it does make you think: Does the government know what they're doing?

SIMON: Political question: Got emails yesterday saying how come cars, not refrigerators, not washer/dryers, not lawn mowers? What's the special clout that the car industry has?

WILLIAMS: Well, it's good to have a lot of senators who care about the car industry and all of the subsidiaries, you know, that attach to it, that feed into the car industry and feed into the making of a car. And cars, of course, fire up jobs. And so what that means is the people who care about jobs say, I'd rather spend that money on the car industry than, let's say, cash for couches - or cash for anything else around, you know.

(Soundbite of laughter)

WILLIAMS: No, I'll spend it on cash for cars.

SIMON: The president's approval rating is now normal. It's at 54 percent, down from 61 percent in mid-June, according to the latest Pew Research poll. Still, certainly more popular than Congress. Help us understand how the president's approval rating might have some influence over what they have to do in the next few weeks.

WILLIAMS: Oh, it has big influence. Because basically when you look at something like health care, what you see is the American people have lots of questions about health care, particularly about whether it will personally benefit them. But they also have trust in President Obama, and certainly more trust in him than in Republicans when it comes to dealing with health care or the economy.

So even if you see declines in the president's numbers, people are saying it's really about whether or not President Obama backs this position and says to me that it will work. If his numbers are going down and his policies - I'd say there, people aren't sure about him - then there's almost no chance that health-care reform will take place. It really rides on his very high approval ratings and confidence in him as an individual.

In fact, you know, it's interesting to note, since he took office, this is the first time that the right track/wrong track numbers - something that political strategists pay a lot of attention to - are about equal. Ever since he's been elected, people thought, you know what, things are getting better. Now, they're not quite so sure. That's a big turn for him.

SIMON: Okay. Thanks very much.

WILLIAMS: You're welcome, Scott.

SIMON: NPR News analyst Juan Williams.

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