Congress OK’s additional $2b for ‘clunkers’

By David Espo
Associated Press / August 7, 2009

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WASHINGTON - Pedal to the metal, Congress sent President Obama legislation last 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 issued shortly after the vote. “The initial transactions are generating a more than a 50 percent increase in fuel economy; they are generating $700 to $1,000 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 backers of the program hailed its effect on the auto industry - which had its best month in nearly a year in July - and 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 Senator Debbie Stabenow, a Michigan Democrat.

The legislation had its share of critics, though, 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 Senator Judd Gregg, Republican of New Hampshire.

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.

There was no suspense about the outcome in the Senate, where supporters of the legislation focused their energies on defeating all attempts at amending the measure. Passage of any changes would have effectively scuttled “cash for clunkers,’’ they said, since the House has already begun a vacation and is not in session to vote on revisions.

An attempt by Senator Tom Harkin, an Iowa Democrat, to limit the program to lower- and middle-income consumers was jettisoned on a vote of 65-32. Gregg’s call for Congress to offset the $2 billion with spending cuts elsewhere also failed, 51-46.

On the final vote, 51 Democrats, two independents, and seven Republicans supported the bill, while 33 Republicans and four Democrats opposed it.