This week, the Senate passed a bill that would extend the first time home buyers incentive program, as well as offering a different tax credit for existing homeowners.
The bill that was passed on Wednesday may give the first time homebuyers tax credit a second life, as it is currently set to expire on on December 01, 2009.
The Current 2009 tax credit, which does not need to be repaid, is only available to those who have not owned a home for at least three years and offers up to $8000 to those who qualify.
Under the new law, these benefits would not only be maintained, but also extended to those who have owned a home for five years or more. However, for existing homeowners, only $6500 would be available. Those buying a home would have until June to close on the home, but would have to have singed a sales agreement by April 2010.
In addition to addressing the housing market, the bill also includes provisions to federally fund unemployment benefits for an additional 20 weeks.
Of course, this bill has a long way to go before it becomes law, as it must still pass the House and then it must be signed by President Obama. This is also not the first bill aimed at extending the homeowners stimulus program, with a $15,000 tax credit for homeowners never gaining much momentum.
Before its passage in the Senate, Republicans had wanted to include a provision requiring that those on unemployment be checked using E-Verify, which is a an online service that checks immigration status, before receiving unemployment benefits. They also wanted the stimulus bill to include an amendment prohibiting Acorn from receiving federal aid.
Both of these requests were refuted by the Democratically held senate, but the bill still needs to be passed by the House, so there may still be more changes made to it.
Last week, the Cash for Clunkers Program narrowly avoided being scrapped after its budget had been expended. However, congress and President Obama approved an additional $2 Billion dollars, so Cash for Clunkers could keep running until November.
This FAQ answers some of the frequently asked questions about the Cash for Clunkers Program, so you can take advantage of this incentive.
The Cash for Clunkers program is program offered by the government to provide an incentive to purchase a new car. The program provides up to $4,500 for traded in vehicles, providing they meet several requirements.
One of the main parts of the Cash for Clunkers Program is that the new vehicle purchased must have an improved gas mileage.
If there is a 4mpg increase $3,500 is offered for the trade in.
If there is a 10mpg increase, $4,500 is offered for the trade in.
No, participating dealers will do all the paper work and apply a credit towards the purchase of a new vehicle.
No, the car purchased must be a new vehicle.
The Trade In must have been manufactured within the last 25 years, have at most an 18mpg fuel rating, and be in running condition.
Yes, the trade in must have been insured and have held a valid registration for the last year.
Yes, you can trade in a car with a salvage title, providing it meets the other requirements.
Yes, work trucks can be traded in as part of the Cash for Clunkers Program. Work trucks do not have the same fuel efficency requirements, but must not be manufactured after 2001. Class 2 and Class 3 trucks are covered and must be traded in for a truck of similar size. $3,500 is offered for work trucks.
No, under the Cash for Clunkers Program, each household is only allowed one credit.
Yes, leased vehicles are covered.
No, if the dealer says you must sign an agreement repaying the credit if the Cash for Clunkers application is rejected, this is not true.
Vehicles that weigh over 8,500 pounds are classified as Class 3 vehicles and do not have a fuel rating set by the EPA. This is one way SUV Manufacturers managed to get around many of the fuel and emissions requirements set by the EPA.
As a result, a larger SUV, weighing over 8,500 pounds, is classified as a work vehicle and only eligible for a $3,500 credit. The SUV must also not have been manufactured after 2001.
The engine of the old car must be destroyed by the dealer, because the Cash for Clunkers Program is designed to take older innefficient vehicles off the road.
The other parts, however, are recycled and sold in scrap yards. This means that the transmission, body, and even mirrors can all be potentially reused. Of course, the engine is also recycled as scrap metal.
Late last Thursday night, announcements that the Cash for Clunkers program had run out of money sent car dealers scrambling to submit their applications. The following day, Friday, the House of Representatives approved a bill that would allocate an extra $2 Billion to keep the Cash for Clunker program going.
The bill, which draws the extra funds from a U.S. Department of Energy program, still needs to be approved by the Senate, which is expected to vote on it this week.
With its additional $2 Billion budget, the Cash for Program would be slated to continue until its November deadline or the funds run out again.
The Cash for Clunkers program originally set aside $1 Billion to provide an incentive for Americans to purchase a new car. The program allots up to $4,500 to people who trade in an old car for a new one with improved gas millage. Dealers all over the country quickly signed up for the program and by the end of July had expended the $1 Billion Cash for Clunkers Budget.
There has not been an official tally yet, but it is estimated that around 250,000 applications have been submitted to the Cash for Clunkers program, with each of these applications representing the purchase of one new vehicle.
Pundits on both sides of the aisle have been quick to draw conclusions from the Cash for Clunkers expended budget. Some claiming that it is evidence that the government could not handle a healthcare program. However, this conclusion is based more off of a need to find faults with nationalized healthcare, than with an actual correlation between healthcare and the Cash for Clunkers Program.
The purpose of the Cash for Clunkers program was to get Americans spending again, purchasing new cars from struggling auto dealers and that is exactly what the program has done. This economic stimulus program preformed just as expected and in fact exceeded most expectations, generating quite literally hundreds of thousands of new car sales at a time when the auto industry needed it most. A budget was created that had a time limit on it and the budget was simply expended before the time limit was up.
While there are a great number of conclusions that could be drawn by the expenditure of the Cash for Clunkers Budget, not all of them positive, to assert that it is an indication that the government can not run a healthcare program is disingenuous at best and an outright lie at worst.
According to reports, the Cash for Clunkers Program could be running out of money, although the White House denies claims that the clash for clunkers program is being suspended.
The Cash for Clunkers program is designed to provide an incentive for people to trade their older vehicles for a new more fuel efficient car. Those that trade in a car that is 4mpg for fuel efficient receive $3,500 and $4,500 is provided for a 10 mpg increase. As part of the program, the traded in vehicle must be destroyed.
The Cash for Clunkers program was slated to run until November 01, 2009 or until its $1 Billion budget had been expended. However, it has become very popular and by July 28, around 16,000 dealers had signed up for the program.
If each of the dealers currently participating in the Cash for Clunkers program were to submit only 18 applications, the program’s budget would be completely depleted and there are reports that some dealers have already submitted more than 250 claims.
At midnight on Thursday, the Department of Transportation reported that the Cash for Clunkers program was being suspended, but these claims were later refuted by the White House Press Secretary Robert Gibbs who said, “We are working tonight to assess the situation facing what is obviously an incredibly popular program.”
Gibbs went on to say, “Auto dealers and consumers should have confidence that all valid cars transactions that have taken place to date will be honored.”
Reports that the Cash for Clunker program had been canceled fueled an increase in nighttime purchases by car dealers. To date, $150 million has already been paid out as part of the Cash for Clunkers program and $850 million is slated for pending applications.
Both Congress and the White House are reportedly looking for ways to continue funding for the Cash for Clunkers program, as it has proved an effective means of increasing new vehicle purchases and upgrading to more fuel efficient vehicles.