- The Washington Times - Tuesday, August 4, 2009

The Obama administration’s call for a $2 billion expansion of the “cash for clunkers” program faces a razor-thin Senate vote that could break either way, with opposition from environmentalists who want stronger pollution-fighting mandates and from conservatives who want to put the brakes on runaway spending.

Another odd pairing lined up on the other side of the debate, as the lobbyist-bashing President Obama found himself teamed up with auto industry lobbyists to promote the rebate program.

Democratic leaders will have to struggle just to overcome the often plodding pace of the Senate to get the bill to the floor before the chamber adjourns Friday for the August recess.

Related article: Can you still get cash for your clunker?

The White House warned that the popular program, which offers rebates up to $4,500 to car buyers who trade in old gas guzzlers for new fuel-efficient vehicles, could run out of money by Friday if the Senate fails to act.

“It’s good for consumers. It’s good for dealers and auto manufacturers,” White House press secretary Robert Gibbs said. “You’ve seen Ford talk about their sales being up as a result of this program. It’s good for our energy security and our environment.”

Auto dealers and the associations that back them have been fighting hard to persuade the Senate to extend the program, which has helped push annualized sales of light vehicles in the United States over the 11 million mark in July.

Auto sales had been languishing at an annual pace of less than 10 million vehicles throughout the first half of the year, but “cash for clunkers” is credited with luring hundreds of thousands of customers to dealer showrooms.

“We’re working hard to share the positive impact the program has had so far,” said Charles Territo, spokesman for the Alliance of Automobile Manufacturers.

The National Auto Dealers Association (NADA) joined the lobbying push, urging its members to flood Senate offices with phone calls supporting the $2 billion infusion.

NADA member Jack Fitzgerald, owner of 11 Fitzgerald Auto Malls in the Washington area, said his employees have contacted their senators, and he said he felt confident the bill would pass. “The program was certainly successful,” he said.

But beyond a quick, temporary jolt to consumer demand, analysts do not expect a long-lasting impact on the industry or the economy from the program.

Ryan Sweet of Moody’s Economy.com said the program was essentially “front-loading” auto sales into July and August of vehicles that otherwise would be purchased over the next several quarters. He estimated that about 250,000 buyers had benefited from the rebates.

While most auto companies reported a slowdown in sales last month, Ford Motor Co. recorded a 2.4 percent increase compared to year-earlier levels. It was the first time that has happened since November 2007. The 164,795 vehicles sold by Ford last month amounted to its highest monthly total in more than two years.

General Motors Corp.’s sales declined 19 percent in July compared with last year, falling to 188,156 vehicles. Chrysler LLC, whose monthly sales had plunged more than 50 percent in some months this year compared with 2008, reported that July sales were down 9 percent.

Toyota’s sales were down 11 percent from year-earlier levels, but jumped nearly 30 percent from June.

Hyundai sales increased 12 percent compared with last year, and more than one out of five sales last month were attributed to the “cash for clunkers” program, which did not begin until July 24.

Senate Minority Leader Mitch McConnell, Kentucky Republican, has proposed red-lighting the program. He said it was part of a pattern of the administration rushing to spend vast sums of money on unproven schemes such as the $787 billion stimulus and health-care reform.

“When the administration comes bearing estimates, it’s not a bad idea to look for a second opinion,” the Kentucky Republican said. “All the more so if they say they’re in a hurry.”

The new money would be redirected from a renewable energy loan program.

The proposed expansion also must contend with fresh resistance from environmentally minded senators who supported the original $1 billion program when it passed by one vote in June.

Sen. Dianne Feinstein, California Democrat, and Sen. Susan M. Collins, Maine Republican, said they wanted the extended program to require higher fuel efficiency and greater emissions reductions from the new cars purchased with government rebates.

Any change to the legislation, however, would stall the program until the House could revisit it in September. The House overwhelmingly approved the current legislation Friday before leaving for the August break.

Transportation Secretary Ray LaHood tried to alleviate environmental concerns, saying that 80 percent of the traded-in vehicles were gas-guzzling sport utility vehicles and pickup trucks, while the most popular replacement car was the high-mileage Ford Focus.

The administration calculated that the new cars purchased under the program got an average 25.4 miles per gallon, a 61 percent increase over the traded-in models.

“We’re encouraging senators to listen to their car dealers and the people they represent,” Mr. LaHood said. “If they do that, it will pass the Senate.”

David M. Dickson contributed to this report.



Click to Read More

Click to Hide