House OKs Extra $2B on "Cash for Clunkers"

In this July 27, 2009 photo, a woman shops for a car at Springfield Auto Mart in Springfield, Vt., a dealer for Buick, Pontiac and GMC. Above her is a car that was dumped in a dumpster as a visual promotion for the government cash-for-clunkers program. (AP Photo/Rutland Herald, Vyto Starinskas) AP Photo

Last Updated at 4:55 p.m. EDT.

The House of Representatives voted Friday to rush $2 billion into the popular but financially strapped "cash for clunkers" car purchase program, heeding calls from U.S. consumers who hope to keep taking advantage of the trade-in incentives.

The bill was approved on a vote of 316-109. House members acted within hours of learning from Transportation Secretary Ray LaHood that the program was running out of money.

The program was set up to boost U.S. auto sales and help struggling automakers through the worst sales slump in more than a quarter-century. Sales for the first half of the year were down 35 percent from the same period in 2008, and analysts are predicting only a modest recovery during the second half of the year.

"This program has been an overwhelming success, allowing consumers to trade in their less fuel efficient cars for a credit to buy more fuel efficient new models," President Barack Obama said in a statement praising the House vote. "It has given consumers a much needed break, provided the American auto industry an important boost, and is achieving environmental benefits well beyond what was originally anticipated."

"I urge the Senate to act with the American consumers in mind to pass this important legislation," he added.

Called the Car Allowance Rebate System, or CARS, the program is designed to help the economy and the environment by spurring new car sales. Car owners can receive federal subsidies of up to $4,500 for trading in their old cars for new ones that achieve significantly higher gas mileage.

According to the National Automobile Dealers Association (NADA), which has conducted a survey of its dealerships, dealerships are averaging 14 "clunker" trade-ins per dealership. With 16,000 dealerships participating in the CARS program, the total number of estimated "clunker" trade-ins is 224,000, CBS News' Carter Yang reports.

House Majority Leader Steny Hoyer said the new money for the program would come from funds approved earlier in the year as part of an economic stimulus bill.

The leader of the House, Speaker Nancy Pelosi, a Democrat, alif., said the cars purchased under the program were much more fuel-efficient than the bill requires.

"Consumers have spoken with their wallets, and they've said they like this program," said Rep. David Obey, a Democrat.

Republicans argued that Democrats were trying to jam the legislation through. Some lawmakers also complained that many dealers were left to contend with a chaotic government-run program.

"The federal government can't process a simple rebate. I've got dealers who have submitted the paperwork three times and have gotten three rejections," said Rep. Pete Hoekstra, a Republican. "What is a dealer supposed to do?"

Earlier Friday, White House spokesman Robert Gibbs said Friday that the program is still "up and running," reports CBS News White House correspondent Mark Knoller.

"If you were planning on going to buy a car this weekend, using this program, this program continues to run," Gibbs told reporters. He would not commit to any timeframe beyond that.

There had been a $1 billion budget for rebates for new car sales in the program that was officially launched last week and has been heavily publicized by automakers and dealers.

The program offers owners of old cars and trucks $3,500 or $4,500 toward a new, more fuel-efficient vehicle, in exchange for scrapping their old vehicle. Congress last month approved the plan to boost auto sales and remove some inefficient cars and trucks from the roads.

The Senate was not scheduled to vote on Friday but lawmakers hoped to win approval for additional funding next week.

Sen. Carl Levin, a leading Democrat, said the administration assured lawmakers that "deals will be honored until otherwise noted by the White House." But he suggested that "people ought to get in and buy their cars."

The clunkers program was set up to boost U.S. auto sales and help struggling automakers through the worst sales slump in more than a quarter-century. Sales for the first half of the year were down 35 percent from the same period in 2008, and analysts are predicting only a modest recovery during the second half of the year.

So far this year, sales are running under an annual rate of 10 million light vehicles, but as recently as 2007, automakers sold more than 16 million cars and light trucks in the United States.

Earl Stewart, who owns a Toyota dealership in North Palm Beach, Fla., said the changing messages on the program has created confusion among his customers and his staff. Stewart's accounting department also could only enter about a dozen of the 47 sales he made into the government Web site set up to handle the transactions, leaving him wondering if he will get refunded for the remaining vouchers.

With so much uncertainty surrounding the program, Stewart said he planned to continue to sell cars under the program Friday but would delay delivering the new vehicles and scrapping the trade-ins. Drivers would be put in loaners until he was absolutely certain the program was still going.

"It's been a total panic with my customers and my sales staff. We are running in one direction and then we are running in another direction," he said.
  • CBSNews

Comments

CBSN Live

pop-out
Live Video

Watch CBSN Live

Watch CBS News anytime, anywhere with the new 24/7 digital news network. Stream CBSN live or on demand for FREE on your TV, computer, tablet, or smartphone.