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Reid urges 'Clunkers' cash timeline

From NBC's Kelly O'Donnell and Domenico Montanaro
Senate Majority Leader Harry Reid (D-NV) sent a letter to Ray LaHood, head of the Department of Transportation, urging him to move faster on reimbursing dealers.

"This program has had a significant stimulative effect on the sale of cars in the U.S., and dealers have submitted hundreds of thousands of vouchers for processing," Reid writes. "In order to capture a sale but also make use of the CARS incentive, dealers have been forced to effectively finance the CARS vouchers for buyers until the dealers are reimbursed by the federal government, placing a strain on dealers' balance sheets that, if prolonged, could eventually offset some of the benefits of the program."

More: "For example, the Department should consider implementing a policy providing that all properly submitted vouchers will be reimbursed within five business days, and continue adding staff and devoting resources as needed to meet this timeline. By adopting such a guideline, dealers will be more willing to place their capital at risk to carry the cost of CARS vouchers until reimbursement."

LaHood has already said the department has staffed up to deal with a backlog of requests for the $4,500 "Cash for Clunkers" initiative. He has not given a specific timeframe for how long it will take the government to get money to every dealership that is owed money.

Here's Reid's full letter:

Dear Secretary LaHood:

I am writing to request that the Department of Transportation take additional steps to expedite reimbursements to U.S. automobile dealers for vouchers issued to consumers under the Car Allowance Rebate System (the "CARS" or "cash for clunkers" program).

As you well know, this program has had a significant stimulative effect on the sale of cars in the U.S., and dealers have submitted hundreds of thousands of vouchers for processing. In order to capture a sale but also make use of the CARS incentive, dealers have been forced to effectively finance the CARS vouchers for buyers until the dealers are reimbursed by the federal government, placing a strain on dealers' balance sheets that, if prolonged, could eventually offset some of the benefits of the program. Indeed, I was disappointed to learn of reports that many dealers are no longer participating in the program due to these concerns.

I recognize the CARS program's success perhaps has placed unexpected burdens on the Department, and I appreciate your decision earlier this week to increase the number of staff devoted to processing voucher submissions. I also appreciate your public remarks this week assuring dealers that properly submitted vouchers will be honored and appropriate notice provided to announce the termination of the CARS program, thus preventing the program from running out of money before all vouchers could be honored.

Notwithstanding these assurances, I believe that even more certainty must be provided to dealers who participate in the program to ensure its continued success. For example, the Department should consider implementing a policy providing that all properly submitted vouchers will be reimbursed within five business days, and continue adding staff and devoting resources as needed to meet this timeline. By adopting such a guideline, dealers will be more willing to place their capital at risk to carry the cost of CARS vouchers until reimbursement, and more dealers will continue participating in the program, thereby maximizing the program's objectives.

I appreciate your consideration of this matter and look forward to your response.

Sincerely,
Harry Reid (D-NV)