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DEMOCRATS Trying To Get GOP Support to Continue Dealer and Consumer Friendly Cash For Clunkers


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Cash for Clunkers

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WASHINGTON August 4, 2009; Ken Thomas writing for the AP reported that the Obama administration expressed more confidence Tuesday that Senate Democrats can win over enough Republicans to pass a $2 billion extension of a popular rebate program that gives consumers up to $4,500 to trade in their old gas guzzlers for more fuel-efficient vehicles.

Transportation Secretary Ray LaHood said the popular program has allowed thousands of Americans to buy a new car at time when the economy is still in a recession and needs a boost in consumer spending.

"I think the last thing any politician wants to do is cut off the opportunity for somebody who wants to get a rebate to buy a new automobile," said LaHood, a former Republican congressman from Illinois.

He predicted the Senate would approve the $2 billion and said the "cash for clunkers" and said the program will "continue seamlessly."

"The money will be there to be reimbursed by the dealers," LaHood said after conferring with assistant Senate Majority Leader Dick Durbin, D-Ill.

On Monday, the White House had warned that the program could come to an abrupt halt Friday if the Senate didn't act favorably on a bill passed by the House last week transferring $2 billion to the program from an economic stimulus account that had been set aside to subsidize renewable energy. The infusion of new money would carry the program through September, said White House Press Secretary Robert Gibbs.

Through early Tuesday, the clunkers program had recorded 157,000 transactions worth $664 million. Eighty-three percent of the vehicles traded in were trucks or SUVs, while 60 percent of the vehicles purchased were passengers cars, for an average increase in fuel efficiency of 61 percent, he said.

Senate discussions continued Tuesday after the Obama administration and backers of the "cash for clunkers" program picked up support from three lawmakers who wanted the program limited to the purchase of even more fuel-efficient vehicles.

Republican Sen. Lindsey Graham of South Carolina predicted that the Senate will approve it. "I hope it comes out of the stimulus program and doesn't add to the debt," Graham said in an interview on NBC's "Today" show. "I think the Senate will act this week and get some of the clunkers off the road."

The fuel efficiency gains helped sway Democrats Dianne Feinstein of California and Chuck Schumer of New York, and Republican Susan Collins of Maine, who had complained that smaller rebates of $3,500 were going to people buying new cars that get as little as 4 more miles per gallon than the gas-guzzlers they traded in.

The three lawmakers said administration officials told them an additional 100,000 to 130,000 were expected to be processed to reach the $1 billion set aside. Another $2 billion was expected to generate the sale of about 500,000 more vehicles.

Car companies said the clunkers program was helping their bottom line. Ford said its sales rose 2.4 percent in July from the same month last year, its first year-over-year increase since November 2007, while Chrysler Group LLC posted a smaller year-over-year sales drop compared with recent months, helped by "clunkers" deals. Other automakers showed gains, giving ammunition to supporters of the car rebate program.

The Ford Focus is a leading replacement vehicle. General Motors Co., Chrysler Group LLC and Ford Motor Co. accounted for 47 percent of the new vehicles purchased.

Most consumers are buying smaller, more fuel efficient vehicles under the program, according to a list of the top-10 selling cars released by the National Highway Traffic Safety Administration, which is administering cash for clunkers.

That includes Honda Civics, Toyota Corollas and Dodge Calibers. The Toyota Prius hybrid, which gets 46 miles per gallon according to EPA estimates, is the fourth best-selling car. There is one SUV on the list, the Ford Escape, which also comes in a hybrid model that can get up to 32 miles per gallon.

Many Republicans remained skeptical, raising objections to the additional costs amid questions about the management of the overwhelmed car rebate program. The GOP holdouts said the government has failed to provide enough data about how well the initial funding has worked and should wait until the fall to provide more.

Many dealers said they were concerned they could be on the hook for some of the money if the Senate fails to act. John McEleney, chairman of the National Automobile Dealers Association, said his organization was warning dealers there were no guarantees they would be reimbursed for sales they make under the program this week. McEleney said he has stopped offering cash-for-clunkers deals at his own Iowa dealerships.

But dealers are still trying to lock up more money. NADA and the American International Automobile Dealers contacted thousands of dealerships, telling them to bombard the Senate with phone calls and e-mails.

Car dealers typically support Republicans and are a potent political force, contributing more than $9 million to federal candidates for the 2008 elections.

AP writers Stephen Manning and Joan Lowy in Washington and Tom Krisher in Detroit contributed to this report.