DJ US Senate Votes 60-37 To Approve $2B Clunkers Extension

By Corey Boles
Of DOW JONES NEWSWIRES

WASHINGTON (Dow Jones)–The U.S. Senate voted on a razor thin margin to
approve a further $2 billion to extend the popular “Cash for Clunkers” program,
ensuring the voucher scheme will be able to continue through the rest of the
summer.

The vote was 60-37, the narrowest margin possible for passage of the
extension. Seven Republicans voted with the majority, while four Democrats
opposed the Clunkers’ extension.

With the Senate’s approval, President Barack Obama can sign the extension
into law, something he will do in the coming days.

The move to bolster the funds available to the program became necessary after
a panic last week by Department of Transportation officials who believed that
the initial $1 billion allocated to the clunkers scheme had been exhausted
after just one week.

The $2 billion is being transferred from the $787 billion economic stimulus
plan agreed to earlier by lawmakers earlier in the year. It was to have been
used to guarantee loans made for investments in renewable energy sources.

Cash for Clunkers offers vouchers between $3,500 and $4,500 to individuals
who trade in gas guzzlers for new, more fuel efficient vehicles. The scheme was
aimed at both providing a much needed boost to new car sales and at benefiting
the environment by removing heavy polluting cars off the road.

It has been widely seen as a success, so much so that its popularity clearly
took both the Obama administration and the auto industry by surprise.

Executives at car makers have said that vehicle stocks are running low, due
to the surge in sales over the last two weeks.

Citing the clunkers success, Neal Soss, an economist at the investment bank
Credit Suisse, upgraded his forecast for U.S. gross domestic product to 2% from
1.3% in the third quarter and to 2.5% from 2% in the fourth quarter.

A week after Transportation Ray LaHood told lawmakers he was pulling the plug
on the program because he feared the $1 billion had been spent, it is still
unclear exactly how many cars have been sold or how much taxpayer money has
been spent. LaHood was overruled by the White House, which insisted clunkers
would not been suspended.

Wednesday, the Department of Transportation said it has processed 184,304
transactions for vouchers worth $775.2 million. But a department spokeswoman
said officials believe some dealers haven’t yet submitted applications for
vouchers.

But according to J.D. Power & Associates, only 30,000 to 50,000 new car sales
are directly attributable to the clunkers program.

Gary Dilts, a senior vice president of global automotive operations at J.D.
Power, said the rest of the sales would have occurred with or without the
vouchers being offered.

He said, however, that “getting a 50,000 boost is a big deal.”

Dilts said he believed the rapid pace of sales would continue into the fall,
given the heightened attention the program has received.

Republicans argued that despite its popularity, lawmakers should pause before
extending the scheme to evaluate its economic and environmental impact.

Before they approved the extension, senators voted down six attempts by
Republican lawmakers to either change the clunkers program or attach unrelated
measures aimed at modifying other federal government programs to it.

Had any of those amendments been successful, it is almost certain the program
would have been halted, as any changes to the scheme would require the approval
of House lawmakers. The House began its month-long summer recess last week, and
it is unlikely lawmakers would have returned to town to vote on an amended
clunkers legislation.

The longer term future of the program is uncertain. Democratic lawmakers
declined to say whether a second extension was in the offing once the $2
billion is spent.