With Senate Vote, Congress Refuels 'Clunkers' Program

By Dana Hedgpeth and Perry Bacon Jr.
Washington Post Staff Writers
Friday, August 7, 2009

The government's "Cash for Clunkers" program won a much-anticipated extension Thursday night as the Senate voted to give an additional $2 billion in funding to the popular initiative aimed at boosting stagnant auto sales.

The 60 to 37 vote follows House approval of a similar measure last week and appears to save the government plan from an unexpected early shutdown. The White House supports extending the program, and the new funds are predicted to last until Labor Day, Transportation Department officials have said.

"Cash for Clunkers" appeared to be in jeopardy last week just days after its official launch. Congress had appropriated $1 billion for the program, which offers vouchers worth up to $4,500 for drivers trading in their gas guzzlers for more fuel-efficient vehicles. But the program drew so much interest that it almost ran out of funds well before its expected expiration in November. Transportation officials warned lawmakers late last week that the plan faced suspension.

In a statement Thursday night, President Obama praised the swift passage of the Senate bill, calling the program "a proven success." Obama could sign the bill as early as Friday.

The Senate vote came after lawmakers considered and rejected several amendments to the legislation, including one from Sen. Tom Coburn (R-Okla.) that would have allowed trade-ins to be donated to charity. The current bill requires that the cars be junked.

"Today's vote is a victory for families and businesses all across the nation," Sen. Debbie Stabenow (D-Mich.) said after the vote.

Seven of 40 Republicans crossed party lines to support the measure, while four Democrats voted against it.

Auto dealers welcomed the prospect of additional money for the program, which has helped draw customers in droves.

"With the additional $2 billion, even more 'clunkers' will be taken off the road and replaced with more fuel-efficient vehicles," John McEleney, chairman of the National Automobile Dealers Association, said in a statement Thursday night. "Extending the 'clunkers' program benefits the environment and the economy. It's the best kind of stimulus."

Dealerships said they continued to see interest as the program ends its second week. AutoNation, one of the largest vehicle retailers in the country, said consumer traffic was up 35 percent over this time last year at its 225 dealerships in 15 states.

Since the program started, AutoNation has taken in 3,500 clunkers. To keep up with anticipated demand from the program, company executives ordered 45 percent more vehicles in the second quarter from major automakers, including Honda, Ford and Toyota.

"Cash for Clunkers is a huge success," said Marc Cannon, a senior vice president at AutoNation. "It is doing everything they said it would do: creating dealer traffic, clearing out inventory and getting more fuel-efficient cars on the road. This is what the American consumer and psyche needed."

On Wednesday, the Transportation Department published new figures showing that a total of 184,304 trades had consumed $775.2 million of the $1 billion originally appropriated. The Toyota Corolla is the best-selling new car under the clunker program. After the Corolla, the top sellers are the Ford Focus, Honda Civic and Toyota's Prius and Camry.

Of the new vehicles not manufactured by the Big Three, according to a preliminary analysis by the Transportation Department, "well over half" were made in United States. Of the trade-ins, more than 80 percent were trucks, the government said, with Ford's Explorer and F-150 pickup topping the list. The average miles per gallon of the new vehicles is 25.3, compared with the trade-ins that averaged 15.8 miles per gallon.

The program, however, has been plagued by troubles. Consumers were confused as to which cars qualified. Dealers said they have spent hours trying to log on to the government's Web sites to put in paperwork on the deals they completed. Some dealers said they ran into problems collecting government payments.

Transportation officials say they have resolved those issues by adding computer capacity and beefing up contracted staff to help run the program.

Some auto analysts and economists are skeptical about the program's long-term impact.

"The Cash for Clunkers at this point is like one of those energy drinks," said Anthony Sabino, a professor of law and business at St. John's University in New York. "It gives you a short-term boost, then you crash and you fall back into the doldrums."

Staff writer Paul Kane contributed to this report.

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