- The Washington Times - Saturday, August 22, 2009

The U.S. Transportation Department, billions of dollars behind in paying “cash-for-clunkers” rebates, has hired private contractors and solicited volunteers from the Federal Aviation Administration and its own executive ranks to work overtime to clear the backlog.

Employees of the FAA’s air-traffic-control unit were asked to help, but the Transportation Department stressed Friday that essential safety personnel were not diverted from their duties.

A total of 1,200 workers, including about 300 contractors from Citigroup, the financial services giant, are now working seven days a week to review applications and reimburse auto dealers for rebates advanced to customers, officials said.

The department tripled its program staff to 1,100 last week, and recently added another 100 headquarters employees.

On Thursday, Transportation Secretary Ray LaHood said the program would stop taking applications Monday at 8 p.m. to provide an “orderly wind-down” and ease uncertainty about when funds would run out.

The National Automobile Dealers Association, which had endorsed the move, urged the Obama administration late Friday to extend the deadline because the program’s Web site was crashing.

“Many dealers are working round-the-clock to submit their ‘clunkers’ applications to meet the administration’s deadline,” the group said. “Despite these efforts, computer issues may prevent some ‘clunker’ applications from being submitted in time, through no fault of the dealers.”

From the start, the Car Allowance Rebate System, or CARS, proved too popular for its $1 billion budget and the several hundred employees assigned to the program.

Planners who expected to sell 250,000 cars in three months are now deluged with nearly twice that many applications seeking more than $2 billion in rebates after less than one month. Only 7 percent of the rebates have been paid, leaving many auto dealers out millions of dollars. Dealers were supposed to be repaid within 10 days.

Auto manufacturers have agreed to provide financial assistance to dealers until they are reimbursed.

Days after the program began, the Transportation Department had to seek additional funding. So many deals were in the pipeline, officials couldn’t be sure when the original funding would be exhausted, and dealers were concerned they would be left holding the bag.

Congress approved $2 billion in additional funding on Aug. 7.

“We set up the program in 30 days, which was what Congress gave us,” said Jill Zuckman, assistant to Mr. LaHood.

“No one anticipated that 250,000 cars would be sold in the first four days. It proved to be more than the people we had available could handle.”

Dealers exacerbated the problem by making many thousands of deals before final program rules were posted on July 24, she said.

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