Senate approves $2 billion expansion for 'cash for clunkers'

McClatchy NewspapersAugust 6, 2009 

WASHINGTON — The Senate voted 60-37 on Thursday to approve another $2 billion for the "cash for clunkers" program, giving new life and money to the federal government's most wildly popular economic stimulus program.

The public's eager embrace of the initial $1 billion program stunned lawmakers, who as recently as Monday doubted that they could muster the votes to keep it alive.

However, they quickly learned they couldn't ignore two important aspects of the program: "This money is going to the little guy, to Main Street, not Wall Street, and it's easy for people to understand," said Evans Witt, the chief executive officer of Princeton Survey Research Associates, a New Jersey-based firm.

The program, which allows consumers up to $4,500 if they trade in older gas- guzzling vehicles for new models, exhausted its first billion dollars in a few days. People flooded auto dealers seeking clunker money and spurring car sales to their highest levels in many months — and dealers pleaded for the program to be extended.

"The reality is this is a program that is working. Consumers believe it is working. Small business people believe it is working," said Sen. Debbie Stabenow, D-Mich.

Still, winning approval wasn't easy. In the hours before the final vote, opponents tried to halt the program until the Obama administration could provide more details about it.

"We need to call a time out, clear all the transactions that qualify, see how much it costs and evaluate how much more, if any, we want to spend," said Sen. Jon Kyl, R-Ariz.

His bid to slow the program was drowned out by the surge of support from across the nation.

Still, Thursday's vote brought an uncharacteristically rousing end to the program's legislative odyssey, a journey that found many lawmakers reluctant to pump more money into the program until the last few days.

The cash for clunkers campaign began earlier this year when a group of Democrats in the House of Representatives, Senate Majority Leader Harry Reid, D-Nev., and some other Senate Democrats pushed the idea.

They met skeptics in many quarters. Sen. Dianne Feinstein, D-Calif., said "some of us have different goals," and urged a plan that would permit vouchers to be used only to buy new or used cars that met tougher fuel efficiency standards than House Democrats sought.

Others were wary of increasing spending. Still others saw it as the creation of another government bailout for an industry that already was getting billions.

Supporters originally pegged the cost at $4 billion, but, realizing that wasn't politically feasible, Senate backers added only $1 billion for it to an emergency war spending bill in June. They said that the other $3 billion would come in separate legislation later this year.

Even the initial $1 billion barely survived. A June 18 test vote on keeping the funding alive got the minimum 60 votes needed, after President Barack Obama personally called at least one senator.

The program began last week, and vehicle dealers reported being swamped with buyers. The House of Representatives acted quickly to keep the program going, passing a measure to add $2 billion a few hours before adjourning for summer recess. The money would come from an energy loan fund.

At the start of this week, however, even with Transportation Secretary Ray LaHood warning on a Sunday talk show that the program would be suspended without more money, some senators remained wary.

Feinstein and Sen. Susan Collins, R-Maine, wrote LaHood a letter, wanting to know specifics about who was buying what kinds of cars under the program.

Senate Energy and Natural Resources Committee Chairman Jeff Bingaman, D-N.M., had reservations about taking the $2 billion from the energy fund. Sen. John McCain R-Ariz., threatened a filibuster. When the Senate reconvened Monday, Republican Leader Mitch McConnell of Kentucky went to the floor and said the program was another example of government unable to manage new initiatives.

Serious opposition faded fast, however.

The National Automobile Dealers Association, with vocal members around the country, weighed in. The Obama administration rushed a "fact sheet" to senators explaining that vehicles sold under the program averaged 25.4 miles per gallon, while the average mpg of trade-ins was 15.8 — a 61 percent improvement.

Feinstein and Collins looked at the data and said they were convinced that the program was meeting their goals. Momentum kept building, as Ford said sales were up 2.4 percent last month over July a year ago, the first such increase since November 2007.

Even a last-minute controversy was quickly doused Wednesday. As Reid was flatly predicting that the extra money would be approved, some senators wondered why the administration hadn't listed the best-selling cars under the program, suspecting that most were models from foreign-owned firms.

Within hours, that list was made available, and it showed that four of the five best-selling models were Hondas or Toyotas.

"The program has been a success for foreign manufacturers," McCain said, though some of those companies manufacture cars in U.S. plants.

Sen. Carl Levin, D-Mich., suggested taking a broader view.

"In just a few days, 250,000 Americans traded in their old car for a new model using the credits available from this program," he said. "That's 250,000 American families that have more fuel-efficient transportation, 250,000 transactions that will pump new money into local economies and an incalculable boost to this nation's struggling auto industry."

ON THE WEB

Frequently asked questions about "cash for clunkers"

Auto dealers' cash for clunkers web page

Pew Research Center report on President Obama

MORE FROM MCCLATCHY

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McClatchy Newspapers 2009

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