Senate salvages 'cash for clunkers' program

June 18, 2009 2:00:35 PM PDT
Senate Democrats narrowly defeated a GOP effort Thursday to kill a $1 billion "cash for clunkers" program that would provide government incentives of $3,500 to $4,500 to motorists who trade in old gas guzzlers for more fuel efficient vehicles. Auto state senators said the program would help hard-pressed car dealers by bringing buyers into showrooms, and they got help from President Barack Obama and Vice President Joe Biden, who made calls to wavering Democrats urging them to keep the plan alive.

"This is an emergency for families and small businesses - for an industry that has been the backbone of our economy for a generation," said Sen. Debbie Stabenow, D-Mich., who sponsored the proposal.

Opponents said it would increase the federal debt without doing much to get expensive-to-operate vehicles off the roads.

Supporters of the program overcame a procedural hurdle by the plan's leading opponent, Sen. Judd Gregg, R-N.H., on a 60-36 vote, winning the minimum number of votes needed to keep the program in a $106 billion war-spending plan.

Four Republicans - Kit Bond of Missouri, Thad Cochran of Mississippi, Susan Collins of Maine and George Voinovich of Ohio - voted with two independents and 54 Democrats, while Democrat Ben Nelson of Nebraska was opposed along with 35 Republicans.

Sen. Maria Cantwell, D-Wash., changed her vote to support the bill and spoke by phone with Obama during the vote.

Cantwell spokeswoman Ciaran Clayton said Obama "acknowledged Senator Cantwell's concerns that the cash-for-clunkers program ... did not do enough to meet our nation's urgent need to reduce foreign oil dependence" and vowed to work with Cantwell and others to "maximize the number of efficient cars on America's roads."

Obama has encouraged Congress to approve the consumer incentives for new car purchases as part of the government's efforts to restructure General Motors Corp. and Chrysler Group LLC.

The auto industry and its union lobbied heavily for passage of the cash for clunkers plan as GM and Chrysler have received billions of dollars in government-led bankruptcies and the entire auto industry has dealt with plummeting car sales. In May, overall sales were 34 percent lower than a year ago.

The Senate was expected to vote on the overall bill later Thursday to pay for continuing the wars in Iraq and Afghanistan. The House approved the cash for clunkers bill last week on a vote of 298-119.

Under the proposal, car owners could get a voucher worth $3,500 if they traded in a vehicle getting 18 miles per gallon or less for one getting at least 22 mpg. The value of the voucher would grow to $4,500 if the mileage of the new car was 10 mpg higher than the old vehicle. The miles per gallon figures are listed on the car window's sticker.

Owners of sport utility vehicles, pickup trucks or minivans that get 18 mpg or less could receive a voucher for $3,500 if their new truck or SUV got at least 2 mpg higher than their old vehicle. The voucher would increase to $4,500 if the mileage of the new truck or SUV was at least 5 mpg higher than the older vehicle.

Dealers participating in the program would receive an electronic voucher from the government for the trade-in to apply to the purchase or lease of a qualifying vehicle. The bill directs dealers to ensure that the older vehicles are crushed or shredded to get the clunkers off the road.

The program was intended to help replace older vehicles - built in model year 1984 or later - and would not make financial sense for consumers owning an older car with a trade-in value greater than $3,500 or $4,500.

The U.S. industry is expected to generate about 9.5 million vehicles sales in 2009, compared with more than 13 million in 2008 and more than 16 million in 2007.

Supporters said the program, which would be implemented by the Transportation Department, was expected to begin by early August. ---

Associated Press writer Matthew Daly contributed to this report. ---

The bill is H.R. 2346. ---

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