Auto Dealers Paid for Just 2 Percent of 'Clunkers' Claims, Congressman Says

Fox News (Link) (August 16, 2009)

The federal government has only reimbursed auto dealers for 2 percent of the claims they've submitted through the popular "cash for clunkers" program, a Pennsylvania congressman said, calling on the Obama administration to help speed up the process.

Rep. Joe Sestak, D-Pa., called for "immediate action" to address the problem in a statement Sunday, after writing a letter to President Obama Saturday expressing his concerns.

In the letter, Sestak said only 2 percent of claims have been paid and that four of every five applications have been "rejected for minor oversight."

In recent days, auto dealers across the country have been complaining that the reimbursement payments are slow to process. And they said some of their applications were being rejected because of apparent procedural issues. The statistics Sestak cited suggest those complaints are not based on isolated incidents.

Staffing could be one problem. According to sales data summarized by Transportation Department officials, dealers have submitted requests for rebates on 338,659 vehicles sold.

But while Congress just expanded the $1 billion program by $2 billion, the Department of Transportation says a staff of just 225 people is reviewing those claims.

Sestak wrote that he thinks 1,000 processors should be assigned to handle the claims. Sestak, who is challenging Sen. Arlen Specter in his state's Senate primary, wrote that auto dealers have contacted him to express their concern and ask for help.

"Failure to address delays with the cash for clunkers program will adversely harm auto dealers in the commonwealth of Pennsylvania and around the country -- undoubtedly forcing many out of business," he said in a statement.

Under the clunkers program, passenger car owners are eligible for a voucher worth between $3,500 and $4,500 if they trade in their gas guzzlers for new, fuel-efficient vehicles.