Aug. 4 Daily News editorial

The federal government’s “Cash for Clunkers” auto rebate program proved its congressional critics wrong. It was the right stimulus program for struggling car makers at just the right time, giving the auto industry a desperately needed shot in the arm.

The offer of up to $4,500 for older, gas-guzzling vehicles sent prospective buyers flocking to auto showrooms. In less than a week, the program’s $1 billion appropriation had nearly been exhausted. Moving with uncommon speed, the House voted last Friday to keep the rebates coming with $2 billion more.

The program’s fate now is up to the Senate, which tends to move at a much slower pace than the lower chamber. There’s no certainty that senators will provide more cash for clunkers soon enough to keep the program going without interruption. Indeed, it’s possible that the Senate will adjourn for its summer break at end of the week without acting on the House appropriation, effectively ending the rebate program. That would greatly disappoint auto makers and a great many Americans who are continuing to crowd into showrooms this week.

Cash for clunkers is one auto bailout package that exceeded all expectations, by far. The program was supposed to run until 250,000 new cars had been sold or until Nov. 1, whichever came first. Congress authorized $4 billion for the program, but appropriated only $1 billion. Many skeptical lawmakers predicted the program would run out of time before it ran out of money. As it turned out, the program appears to have burned through its $1 billion budget in less than seven days. As of last Thursday, the Los Angeles Times reported that federal rebates totaling about $150 million had been paid to auto dealers and the program had pending applications for an additional $850 million in rebates.

Despite headaches over paperwork and some confusion about whether or not rebates are guaranteed for applications written this week, auto dealers have benefited significantly from cash for clunkers. The program helped jump start new car sales, no question. Former Federal Reserve Chairman Alan Greenspan believes timing had a lot to do with its success, according to Associated Press writer Ken Thomas. Greenspan said the auto industry and consumer confidence had begun to rebound just before the program began. “There is no doubt that that very extraordinary response (to the program) is a very important indicator that the state of confidence in the economy is beginning to pick up,” the former Fed chairman added.

Critics of cash for clunkers may seize Greenspan’s comments as evidence that the program already has served whatever usefulness it had. But the program’s purpose was twofold — to increase new car sales and get old, low-mileage vehicles off the roads. By some estimates, replacing a quarter of a million gas guzzlers with new, more fuel-efficient cars that pollute less would save upwards of 40,000 barrels of transportation fuel per day.

Cash for clunkers has accomplish more than its proponents predicted, and in a shorter span of time. It would be ironic if the program fell victim to its extraordinary success.