Senate majority leader promises additional 'cash for clunkers' funding soon

By Jim Puzzanghera

Aug. 5, 2009 12 AM PT

WASHINGTON — Responding to overwhelming consumer demand and arm-twisting by President Obama, senators won’t drive out of town for vacation this week before approving more money for the “cash for clunkers” program, Senate Majority Leader Harry Reid (D-Nev.) promised Tuesday.

Reid’s vow, delivered after he and Senate Democrats had lunch with Obama at the White House, seems to assure that the vehicle rebate program will continue at least through Labor Day. A vote could come as soon as today.

The House last week appropriated an additional $2 billion for cash for clunkers after consumers nearly depleted its $1-billion allotment, which had put the program in danger of shutting down. Support in the Senate for the additional money has not been a problem, particularly after the Department of Transportation released data showing that consumers were opting for more fuel-efficient vehicles than required by the program.

But with some Republican opposition preventing a quick voice vote, a busy Senate schedule for the last week before a monthlong break and Obama pushing for Senate action, Reid made clunker money a priority. “We will pass cash for clunkers . . . before we leave here,” Reid told reporters.

Transportation Secretary Ray LaHood said he was optimistic that the Senate would come up with the additional money to keep the program running past Friday. Since formally starting last week, cash for clunkers had paid out $664 million in $3,500 to $4,500 rebates for approximately 157,000 new vehicle purchases as of Tuesday morning.

“People love to buy cars, and we’ve given them the incentive to do that,” LaHood said at a news conference. “I think the last thing that any politician wants to do is cut off the opportunity for somebody who’s going to be able to get a rebate from the government to buy a new automobile.”

Some Republicans continued to oppose the program, calling it unwarranted government deficit spending that now could grow to $3 billion.

“Americans aren’t stupid. You give them 4,500 bucks, they’re going to find any car they’ve got,” Sen. Tom Coburn (R-Okla.) said. “It’s $3 billion we’re talking about that’s going to go to help people to buy cars, but where are we going to get the $3 billion from? We’re going to steal it from our children.”

Some data released Tuesday by the Department of Transportation could be ammunition for opponents of the program. It showed that four of the top five vehicles that consumers have bought under the program are made by foreign-headquartered automakers.

But White House Press Secretary Robert Gibbs noted that the top car in the program was the Ford Focus and that 47% of vehicles purchased were made by U.S.-based automakers, slightly above their 45% domestic market share.

The National Assn. of Automobile Dealers continued to caution dealers that until the Senate approves the additional money, they risk not being reimbursed for future cash-for-clunkers deals. But many dealers continued to participate, said Bailey Wood, a spokesman for the group.

Dealer concerns about reimbursement have been eased after the Department of Transportation changed a program rule last week, he said.

The rule had required trade-in vehicles to be permanently disabled before dealers could apply for government reimbursement of the consumer rebate. Dealers now have up to seven days after receiving the reimbursement to disable a vehicle’s engine.

LaHood, along with Energy Secretary Steven Chu and Environmental Protection Agency Administrator Lisa Jackson, sent a letter Monday to every senator, warning that the program “will have to be suspended shortly owing to the overwhelming demand” unless the Senate approves the additional money.

“Such a suspension would be a blow to our economy, to the environment, and to Americans’ confidence in the emerging recovery,” they said.

The letter also contained data from the transactions completed so far. The average fuel economy of the vehicles traded in was 15.8 miles per gallon, and that of the new vehicles purchased was 25.4 mpg. The nearly 10-mpg average increase is much higher than the program’s minimum requirement of 2 mpg for trucks and 4 mpg for cars.

Michigan had seen the most sales through the program as of Tuesday morning, with $34.4 million worth of cash-for-clunkers vouchers. Ohio was second with $29.3 million, followed by California with $26.4 million.

LaHood also addressed complaints by auto dealers about difficulty submitting the complicated applications for reimbursement because of an overloaded online filing system. He told senators that the Transportation Department had streamlined the process and more than doubled the number of staff members reviewing applications.

“We think the spigot, which was at a drip at best, is now flowing,” Wood said of the government reimbursements.

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BEGIN TEXT OF INFOBOX

Trade-in results so far

All numbers are as of Tuesday morning.

25.4 - average miles per gallon of vehicles purchased under the “cash for clunkers” program

15.8 - average mpg for clunkers turned in for demolition

83% of the clunkers traded in are SUVs and trucks

60% of the new vehicles purchased are cars

Top 5 states

Vouchers issued:

Michigan: $34.4 million