by Neil Roland

WASHINGTON — The Senate added $2 billion to “cash for clunkers,” ending a week of suspense about whether the popular new program would have to shut down for lack of funds.

The bill, identical to the one that passed the House last week, now goes to President Barack Obama for his signature.

The administration has pushed hard for the new funding. Tonight’s 60-37 vote is a victory for the auto industry, Democrats and consumers who have unexpectedly flocked to near-empty showrooms since the program began July 1.

“This has been a highly successful program, probably the most successful of any in the stimulus package to date,” Sen. Carl Levin, D-Mich., said on the Senate floor today. The new funding will extend the temporary program through Labor Day and spur about 500,000 new auto sales on top of the 250,000 already completed, Transportation Secretary Ray LaHood has said. LaHood warned last week that the program would have to be suspended because its $1 billion fund would be depleted by Aug. 2.

“Cash for clunkers is a new engine for automakers; a tune up for the environment; and a jump start for communities across the country whose economies are dependent on a strong auto industry,” Dave McCurdy, CEO of the Alliance of Automobile Manufacturers, said in a statement tonight.

“We applaud the administration and the Congress for their efforts to ensure that consumers can continue to take advantage of this successful program.” Rapid legislative action The House reacted within 24 hours of that warning by passing the extension. In passing the same legislation today, the Senate acted a day before its month-long recess begins. The Senate rejected amendments from six Republicans and one Democrat that would have delayed new funding for at least a month and likely resulted in a suspension of the program.

Any amendments that passed the Senate also would have required approval by the House, which is in recess until after Labor Day. The Senate overrode some Republicans’ objections about the program’s management, cost and targeting of the auto industry.

“We’re going to subsidize the purchase of automobiles by stealing from our children,” Sen. Tom Coburn, R-Okla., said today. The $2 billion is to be transferred from a renewable energy loan-guarantee program funded under the stimulus package that was enacted last February. Congressional leaders have said they intend to replenish the Department of Energy funds. The clunkers program provides $3,500-$4,500 credits to consumers who swap trade-ins for new vehicles with higher mileage. Dealers are reimbursed by the government after furnishing the credits.

Congress responded in the past week with unusual speed to evidence that the program has invigorated the slumping auto industry and improved the fuel economy of vehicles on the road. Sales gains for several automakers In July, Ford Motor Co. posted its first U.S. sales increase in 19 months, buoyed by cash for clunkers. Percentage declines at General Motors, Toyota Motor Sales and other automakers were the lowest for 2009. GM, Toyota and Ford have responded to July sales surges by saying they will boost third-quarter production schedules or may do so.

The suspense about the future of the clunkers program began July 30 when a National Automobile Dealers Association survey found that stores had completed so many deals that the $1 billion fund would soon be depleted. The program was supposed to last until Nov. 1, or until the funds ran out, whichever came first. Dealers had filed rebate claims for only a fraction of the transactions.

Many dealers ran into computer and processing roadblocks, and a number of their applications were rejected for processing errors. LaHood met with lawmakers and NADA July 30, and said the program would have to be suspended that night. Hours later, the White House said the program was continuing but under review.

The confusion created day-to-day uncertainty among dealers about whether they were going to be reimbursed for any deals they completed.  NADA advised members to proceed cautiously with clunker deals because they faced a risk of not getting reimbursed.  The House passed its $2 billion extension on July 31, leaving only a week for the Senate to act.

Two pro-environment senators, Democrat Dianne Feinstein of California and Republican Susan Collins of Maine, said they wouldn’t support an extension unless the program was tightened to increase fuel economy. But they reversed themselves when the administration produced evidence that cars sold under the program averaged 25.4 mpg, a 61 percent increase over the 15.8 average of trade-ins, which were mostly trucks.

Source: Automotive News