Senate Under Pressure to Extend "Clunkers"

Updated 1:15 p.m. ET

The Senate came under increasing pressure Monday to refuel the stalling "cash-for-clunkers" initiative amid uncertainty over how much money, if any, is left in the fund bankrolling the popular program.

The Obama administration pushed for an additional $2 billion after serving notice over the weekend that the program could expire as early as this week unless the Senate acts, as the House did in voting overwhelmingly for the money last Friday.

Transportation Secretary Ray LaHood is predicting the Senate will pass legislation adding $2 billion to save a financially strapped "clash-for-clunkers" car-buying program.

LaHood said Monday that the program has been "wildly popular" and argued that it is good for the economy as well as the environment. In an interview broadcast on MSNBC, LaHood declined to discuss administration options if the Senate does not act before it goes on its summer recess at the end of the week.

LaHood said, "We're encouraging senators to listen to their car dfealers and the people they represent. If they do that, it will pass the Senate."

Fierce lobbying for keeping the program running came from several quarters. The National Automobile Dealers Association and the American International Automobile Dealers said they were contacting thousands of dealerships and encouraging them to bombard the Senate with phone calls and e-mails.

"This is the one true stimulus that seems to be working out of all the things that have been tried in the last few months," said Cody Lusk, president of the international dealer association.

CBS News correspondent Bob Fuss reports that despite the pressure, it's not certain the Senate will act. The Senate was very cool to this program the first time around with some leading Democrats thinking it didn't to enough to make sure the new cars it subsidized got really good gas mileage and many Republicans objected to what they saw as another bailout for the auto industry.

The program barely passed the first time, and only because it was attached to a must-pass bill funding the wars in Iraq and Afghanistan.

LaHood had said earlier that if the $2 billion isn't approved, "we would have to suspend the program." At the same time, LaHood told C-SPAN's "Newsmakers" show Sunday that the administration would "continue the program until we see what the Senate does and I believe the Senate will pass this."

"Any deal that is made (Monday) or the next day and that is in the pipeline, ... the dealer will be reimbursed and the car buyer will be reimbursed," the secretary declared.

The program provides consumers with $3,500 or $4,500 in incentives for trading in gas guzzlers for more fuel efficient vehicles. Automakers were reporting July's auto sales on Monday and analysts expected the car program to provide a boost in overall sales.

Only the Senate can help at this point; the House last Friday voted for the money to be put into the popular program, and the House members have left on their summer recess. The Senate is scheduled to start its vacation by week's end.

At least one GOP senator questioned the need to speed the money.

"This is crazy to try to rush this thing through again while they're trying to rush through health care, and they want to get on to cap and trade electricity tax," said Sen. Jim DeMint, R-S.C. "We've got to slow this thing down."

Former Federal Reserve Chairman Alan Greenspan said car and truck building had begun to rebound even before the program got under way. But, he added, "there is no doubt that that very extraordinary response is a very important indicator that the state of confidence in the economy is beginning to pick up." If the incentive program had gone into place six months ago, he said, "it would have probably been a dud."

Obama officials scrambled last week to add money to the Car Allowance Rebate System (CARS), which is designed to get old, polluting vehicles off the road and scrapped while helping car dealers emerge from the recession. The $1 billion has led to the sale of 250,000 new vehicles.

Owners of gas-guzzlers can receive rebates of $3,500 or $4,500 toward the purchase of a new fuel-efficient car. LaHood said 62 percent of the traded-in vehicles were trucks and "these people are buying cars that get much better gas mileage."

The program helped lift Ford Motor Co. to its first monthly sales increase in two years, the company's top sales analyst said Sunday.

July sales results mark the first year-over-year gain for Ford since November 2007 and apparently the first uptick by any of the six biggest carmakers since last August, George Pipas said. He declined to disclose a specific total before sales results are officially reported Monday.

"We were having a good month - and Ford's been having some good months lately - but the (clunkers) program really put us over the top for sure," Pipas said.

Meanwhile, Chrysler is dropping its offer to increase the rebate offered by the government plan, according to the Wall Street Journal.

Pennsylvania car dealer Bill Rosado told the Journal, "I can't believe I'm saying this, I need more Chrysler inventory. My goodness, I've got to rehearse that line a couple times." (Read more in EconWatch.)

The Senate narrowly approved the initial money in June. But some lawmakers who voted for the plan, including Sens. Dianne Feinstein, D-Calif., and Susan Collins, R-Maine, have said the additional dollars should push consumers to buy more fuel-efficient vehicles and allow people to buy fuel-efficient used vehicles. Sen. Jeff Bingaman, D-N.M., has said he was concerned with the way the House paid for the extension, shifting $2 billion from a renewable energy loan program.

LaHood said dealers will be reimbursed for deals in the pipeline and that the government will make a "good-faith effort" for transactions beginning Monday.