'Clunkers' Cash Could Dry Up by Week's End

Published August 4, 2009

Facing a White House deadline, Senate Democrats are struggling to win over enough reluctant Republicans to pass a $2 billion extension of a popular rebate program that gives consumers up to $4,500 to trade in their old gas guzzlers for more fuel-efficient vehicles.

Photos: 10 Things You Should Know About "Cash for Clunkers" Program

Senate discussions are expected to continue Tuesday after the Obama administration and backers of the "cash for clunkers" program picked up support from three lawmakers who wanted the program limited to the purchase of even more fuel-efficient vehicles. Data released by the administration showed the new vehicles purchased under the program were 61 percent more fuel-efficient than the trade-ins.

The fuel efficiency gains helped sway Democrats Dianne Feinstein of California and Chuck Schumer of New York, and Republican Susan Collins of Maine, who had complained that smaller rebates of $3,500 were going to people buying new cars that get as little as 4 more miles per gallon than the gas-guzzlers they traded in.

The three lawmakers said administration officials told them that 120,000 new vehicle sales had been processed through the program and an additional 100,000 to 130,000 were expected to be processed to reach the $1 billion set aside. Another $2 billion was expected to generate the sale of about 500,000 more vehicles.

Car shoppers can still take advantage of the incentives, but the White House said the incentives were unlikely to continue into the weekend if the Senate fails to approve the funding. White House spokesman Robert Gibbs estimated the additional $2 billion would allow consumers to take advantage of the incentives through September.

Car companies said the clunkers program was helping their bottom line. Ford said its sales rose 2.4 percent in July from the same month last year, its first year-over-year increase since November 2007, while Chrysler Group LLC posted a smaller year-over-year sales drop compared with recent months, helped by "clunkers" deals. Other automakers showed gains, giving ammunition to supporters of the car rebate program.

Transportation Secretary Ray 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. General Motors Co., Chrysler Group LLC and Ford Motor Co. accounted for 47 percent of the new vehicles purchased.

Many Republicans remained skeptical, raising objections to the additional costs amid questions about the management of the overwhelmed car rebate program.

"I've talked to too many dealers who say it's the most inept and poorly run program they've ever dealt with," said Sen. Jim DeMint, R-S.C. "We need to get to the bottom of that before we spend $2 billion more."

Sen. Tom Coburn, R-Okla., one of the most fiscally conservative senators, was undecided on whether to mount a filibuster of the bill. "I'm going to hold my fire for right now until I see what happens," Coburn said.

The clunkers funding was running into a busy Senate calendar, only days before lawmakers were to depart for an August recess, that included debate on the Supreme Court nomination of Sonia Sotomayor and a spending bill. Senate Democrats were scheduled to have lunch with President Barack Obama on Tuesday to discuss efforts to overhaul health care, and some lawmakers thought the consumer rebates might come up during the discussion.

"I wouldn't be surprised given how strongly he's supporting this, that he says, 'By the way, fund cash for clunkers,'" Sen. Debbie Stabenow, D-Mich., said of Obama.

As the Senate works to extend the program, many dealers said they were concerned they could be on the hook for some of the money if the Senate fails to act. John McEleney, chairman of the National Automobile Dealers Association, said his organization was warning dealers there were no guarantees they would be reimbursed for sales they make under the program this week. McEleney said he has stopped offering cash-for-clunkers deals at his own Iowa dealerships.

But dealers are still trying to lock up more money. NADA 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.

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Associated Press writers Stephen Manning in Washington and Tom Krisher in Detroit contributed to this report.

Written by Associated Press

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