Senate tops off cash-for-clunkers with $2 billion

The flawed-but-popular program was kept running with a cash infusion, and sales continue to be brisk.

By DAVID ESPO, Associated Press

Last update: August 7, 2009 - 5:56 AM

Print this story

More from Politically Connected

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 issued 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."

Supporters of the program hailed its effect on the auto industry 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, 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 Sen. Judd Gregg, R-N.H.

Seven of 40 Republicans crossed party lines to support the measure, while four Democrats voted against it. Sens. Amy Klobuchar and Al Franken, both D-Minn., voted for the bill.

Officials said the program's initial $1 billion probably already has been spent, but a paperwork backlog prevented an accurate accounting.

Meanwhile, 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 last year.

"Cash-for-clunkers is a huge success," said Marc Cannon, a senior vice president at AutoNation. "It's a grand slam. 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."

The Washington Post contributed to this report.

Recent Politically Connected stories

State has plan to borrow up to $600 million, just in case - August 7, 2009

State has plan to borrow up to $600 million, just in case - That's on top of a plan to borrow hundreds of millions from schools. But official is "fairly positive" short-term borrowing won't be necessary. More