Senate refuels clunker program

WASHINGTON – Pedal to the metal, Congress sent President Barack Obama legislation Thursday night with an additional $2 billion for “cash for clunkers,” the economy-boosting rebate program that caught the fancy of car buyers and instantly increased sales for an auto industry long mired in recession.

The Senate approved the money on a 60-37 vote after administration officials said an initial $1 billion had run out in only 10 days. The House voted last week to keep alive the program, which gives consumers up to $4,500 in federal subsidies if they trade in their cars for new, more energy-efficient models.

Without action, lawmakers risked a wave of voter discontent as they left the Capitol for a monthlong vacation.

“Cash for clunkers has been a proven success,” Obama said in a written statement shortly after the vote. “The initial transactions are generating a more than 50 percent increase in fuel economy; they are generating $700 to $1000 in annual savings for consumers in reduced gas costs alone, and they are getting the oldest, dirtiest and most air polluting trucks and SUVs off the road for good.”

Senate supporters of the program hailed its effect on the auto industry – which had its best month in nearly a year in July – as well as its claimed environmental benefits.

“The reality is this is a program that has been working. Consumers believe it’s working. Small business people believe it’s working. People who make steel and aluminum and advertisers … and everyone who’s involved in the larger economic impact of the auto industry believe it is working,” said Sen. Debbie Stabenow, D-Mich.

The legislation had its share of critics, most of them Republicans.

“What we’re doing is creating debt. … The bill to pay for those cars is going to come due on our children and grandchildren,” said Sen. Judd Gregg, R-N.H.

Officials said the program’s initial $1 billion probably already has been spent, but a paperwork backlog prevented an accurate accounting. The additional $2 billion is enough to help consumers purchase a half-million more new cars, they added.

The government said Wednesday that more than $775 million of the original funds had been spent, accounting for the sale of nearly 185,000 new vehicles. Administration officials estimate the extra funding will last into Labor Day.

Under the program, passenger car owners are eligible for a voucher worth $3,500 if they trade in a vehicle getting 18 miles per gallon or less for a new car getting at least 22 mpg. Vouchers of $4,500 are available for owners who trade in a passenger car getting 18 mpg or less for a model that gets at least 28 mpg.

Dealers are barred from reselling the trade-ins and are charged with ensuring their destruction.