August 3, 2009 in Business, Nation/World

Administration: Clunker deals could end by Friday

$2 billion for extension awaits Senate approval
Associated Press
 

WASHINGTON — The government’s wildly popular “cash for clunkers” program, offering $4,500 rebates to customers who trade in gas guzzlers, is likely to end Friday if the Senate doesn’t approve $2 billion more for it, the White House says.

“If it doesn’t happen this week, it’s unlikely that we’ll make it to the weekend with a program that can continue,” said President Barack Obama’s spokesman, Robert Gibbs.

He said Monday the $2 billion would fund the program through September.

The House approved the money by a nearly 3-to-1 margin last Friday before recessing for the month of August.

But the legislation faces a tougher fight in the Senate, where conservatives deride it as the latest in a series of taxpayer bailouts for the auto industry and environmentalists want to wring out more fuel efficiency. The Senate plans to take a four-week recess beginning Friday, after it votes this week on Sonia Sotomayor’s nomination to the Supreme Court.

Transportation Secretary Ray LaHood said the average fuel economy of new vehicles purchased through the program is 9.6 miles per gallon higher than for the vehicles traded in for scrap. Buyers of new cars and trucks that get 10 mpg better than their trade-ins get the $4,500 rebate. People whose cars get between 4 mpg and 10 mpg better fuel efficiency qualify for a smaller $3,500 rebate.

LaHood said some 80 percent of the traded-in vehicles are pickups or SUVs, meaning many gas-guzzlers are being taken off the road. The Ford Focus is a leading replacement vehicle.

Ford Motor Co. reported its first U.S. sales increase in nearly two years on Monday, and other major automakers said sales showed signs of stability. Chrysler Group LLC posted a smaller year-over-year sales drop compared with recent months, also helped by “clunkers” deals.

“The program is working the way Congress intended it to work,” he asserted on MSNBC. But it was not intended to run out of money nearly so quickly, nor create such confusion at dealerships.

The administration pressed hard for an additional $2 billion after serving notice over the weekend that the program could expire as early as this week unless the Senate acts.

Senate Republicans appeared to be in no rush Monday. “We were told this program would last for several months,” GOP leader Mitch McConnell of Kentucky said in remarks prepared for a Senate floor speech. “It ran out of money in a week, prompting the House to rush a $2 billion extension before anybody even had time to figure out what happened to the first billion.”

McConnell said, “It’s not a bad idea to look for a second opinion. All the more so if they say they’re in a hurry.”

The administration collected information on 80,500 vehicle transactions logged into the government’s operating system through Saturday afternoon. An official said the fuel efficiency improvements would save a typical customer $700 to $1,000 a year in fuel costs. The new vehicles were getting 25.4 miles per gallon on average, a 61 percent increase over the models traded in, said the official, speaking on condition on anonymity because the figures had not been released.

The data were aimed at appeasing lawmakers such as Sens. Dianne Feinstein, D-Calif., and Susan Collins, R-Maine, who have questioned whether the program’s environmental benefits go far enough.

“We’re encouraging senators to listen to their car dealers and the people they represent,” LaHood said. “If they do that, it will pass the Senate.”

The administration has been coy about just how long dealers would be reimbursed for rebates of up to $4,500 per vehicle, after saying Sunday that the program would have to be suspended if the Senate failed to act.

Fierce lobbying for the program came from other quarters: The National Automobile Dealers Association and the American International Automobile Dealers contacted thousands of dealerships, telling them to bombard the Senate with phone calls and e-mails.

“This is the one true stimulus that seems to be working out of all the things that have been tried in the last few months,” said Cody Lusk, president of the international group.

The Senate narrowly approved the initial money in June. But some lawmakers who voted for the plan, including Feinstein and Collins, have said the additional dollars should push consumers to buy more fuel-efficient vehicles and allow people to buy fuel-efficient used vehicles. Sen. Jeff Bingaman, D-N.M., has said he was concerned with the way the House paid for the extension, shifting $2 billion from a renewable energy loan program.

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