"Cash for Clunkers" Gets $2B Fill-Up

(CBS/AP)  Acting with unusual haste, the Senate voted to aprove a $2 billion fill-up Thursday for "cash for clunkers," an economy-boosting program that sent car buyers storming into formerly deserted auto showrooms at a pace that quickly exhausted its $1 billion funding.

The Senate approved the measure 60-37, following the lead of House members, who approved a "cash for clunkers" extension last week.

The program gives consumers up to $4,500 in federal subsidies when they trade in their cars for new, more energy-efficient models. In 10 days, the program has instantly increased sales for an auto industry long mired in recession.

Lawmakers made sure to keep the popular program alive before heading home for a monthlong vacation. The Senate vote sends the bill to the White House, where President Barack Obama's signature is virtually assured.

Obama administration officials have said that without new funds, the program would have expired by Friday. Officials said the additional money would help consumers purchase 500,000 more new-model cars.

The Senate's action capped an unusually swift response by lawmakers, who were informed scarcely a week ago that the program was quickly running short of money.

Before the vote, the bill's supporters worked to defeat numerous proposed modifications to the program. "We all know that if we change the bill, it will die," Senate Majority Leader Harry Reid, D-Nev., told reporters a few hours before debate began. "We are going to do everything we can to stop that."

Among the proposed changes was one to place the car-buying subsidies off-limits to the wealthy.

As the program stands, Microsoft founder Bill Gates can get $4,500 to buy a new car, said Sen. Tom Harkin, D-Iowa. "You have to ask, is this a wise way to spend limited amounts of money?"

Republicans readied amendments to terminate the Troubled Assets Relief Program that has spent billions bailing out banks and other financial institutions, and to require the government to sell its stake in General Motors Co. and Chrysler Group LLC.

The program began 10 days ago with $1 billion, designed to help automobile makers and consumers while contributing to a cleaner environment. The government said Wednesday that more than $775 million of the original funds has been spent, accounting for the sale of nearly 185,000 new vehicles. Administration officials estimate the extra funding will last until Labor Day.

Under the program, passenger car owners are eligible for a voucher worth $3,500 if they trade in a vehicle getting 18 miles per gallon or less for a new car getting at least 22 mpg. Vouchers of $4,500 are available for owners who trade in a passenger car getting 18 mpg or less for a model that gets at least 28 mpg.

There are similar guidelines for SUVs and pickup trucks.

Dealers are barred from reselling the old models, and are charged with assuring their destruction.

Jeremy Anwyl, CEO of the auto Web site Edmunds.com, said the unintended result is that vehicle prices are climbing.

"What we've created now is a shortage for key models," he said. "Prices are going up dramatically."

Hyundai Motor Co. has added a day of production at its Montgomery, Ala., factory, while Ford Motor Co. and GM are considering following suit.

Tom Stephens, vice chairman of product development at GM, said in an interview that the company has had spot shortages of compact and midsize cars, which have been popular with consumers jettisoning their clunkers. The company also reported an increase in sales of the Chevrolet HHR small sport utility.

"Consumer confidence is really what you need here," Stephens said. "It's hard for them if they don't know if they have a job or a for-sure paycheck to go out and make a major purchase, so I think this is kind of jump-starting some things."

The longer-term impact is uncertain, but so far, GM's share of cars sold under the program is largest, accounting for 18.7 percent of new sales. Toyota Motor Corp. followed with 17.9 percent, while Ford had 16 percent. Detroit automakers represented 45.3 percent of the total sales while Toyota, Honda Motor Co. and Nissan Motor Co., all Japanese firms, totaled 36.5 percent.

Toyota also has the best-selling new model for traders of clunkers, the Corolla. The Ford Focus, Honda Civic, Toyota Prius and the Toyota Camry are also favorites. There is one SUV on the list, the Ford Escape, which also comes in a hybrid model that can get up to 32 mpg. Six of the top-10 selling vehicles are built by foreign manufacturers, but most are built in North America.

[credibility2]

There's nothing like a fictitious aid from the government like this program, to force the delusional takers to go deeper into debt, limiting their available cash to invest in their financial-present, like supporting their families, or paying down other debt, or saving the money otherwise being frittered away for a multi-year lease or straight purchase agreement that includes interest. So, exactly how much good will something like this do for the economy? Very little when one factors in the cost of savings for fuel efficiency comparative to the new cost to purchase a replacement car (for something that was probably working very well with a number of years of use still to go) at say $400 or more per month? What year will the real break-even point be realized? Has anyone figured that out? Another government gimmick to confuse the average smoe. The smoes probably had a usable car, but fell for the $3,500-4,500 gimmick to trade-in just so they could go into debt for thousands and thousands of dollars. Real smart.

[babooph]

Republicans voted against it? Surely all those rich guys want to turn in those 20 year old rust buckets they have been driving all year ??Wonder why the propaganda system did not notice????!!!!

[zonkzilla]

Democrats trying to find ways to destroy the oil company slavery of the US, help working Americans get and keep jobs, and helping the economy, those "socialist liberal" jerks.

As for Bill Gates being able to use the program, since he pays almost no taxes on the billions he has and makes each year, the $4,500 for the clunker program is nothing compared to the billions from the Bush/Republican tax welfare Gates gets every single year. By the way Bill, I am using Linux/Firefox right now and it is 100 times better than that obsolete crashing garbage your company puts out.

[grabandgo]

We need to get rid of the "old clunkers" in Washington.

[zonkzilla]

Put a .15 per gallon tax on gas, make the program permanent using the tax money, and we can reduce gasoline use (an prices) in the US by 40% in 4 years.
It's not really a tax though since people would get the money back in the form of the voucher when they buy the new fuel efficient car.
So which would you rather pay, a 2.00 per gallon tax from the wall street manipulators, oil companies, and OPEC each time they want more money or a .15 per gallon tax that would save you thousands a year in money spent on gas and get the US off the foreign oil addiction?

[excoachken]

So, why can't they pass a National Health Care plan now, since our health care system is in worse shape than our car companies?

[endurorob]

As the program stands, Microsoft founder Bill Gates can get $4,500 to buy a new car, said Sen. Tom Harkin, D-Iowa. "You have to ask, is this a wise way to spend limited amounts of money?"



I am sure if he had his way if you actually pay taxes youwould not be able to use this tax payer funded rebate program.

[endurorob]

Another $2b in tax payer subsidies to the auto companies.

[notohp2002]

Hey man, puf, puff, how about a pot allowance, man. I am serious, just think how much better all our useless dregs of society will feel and improve their eye-sight.

[jab232]

I am grateful for the Republians who voted for this, as well as for the Republicans who voted to confirm Sotomayor. Not all Republicans are birthers and corporation-backed yellers.