- The Washington Times - Thursday, August 6, 2009

The White House-backed $2 billion expansion of the “cash for clunkers” program inched toward a final Senate vote by week’s end, amid Democratic threats Wednesday to postpone the chamber’s August recess and an endorsement of the program from California’s Republican governor, Arnold Schwarzenegger.

Senate action is scheduled for Thursday on the program, which offers up to $4,500 in rebates for consumers who trade in old gas-guzzlers for new fuel-efficient cars and requires car dealers to scrap the traded-in vehicles.

Senate Majority Leader Harry Reid, after drawn-out negotiations with Republicans, announced late Wednesday the agreement to proceed with a vote.

A new wrinkle emerged, however, with the release of government data that showed more than half of the cars purchased under the program were foreign makes, mostly Japanese brands Toyota, Honda and Nissan and South Korean brand Hyundai.

The revelation somewhat undercut arguments that cash-for-clunkers spending was boosting U.S. automakers, though General Motors Co. was the top-selling make with 18.7 percent of the sales, according to the National Highway Transportation Safety Administration.

The original $1 billion program passed the chamber by one vote in June. Mr. Reid, Nevada Democrat, said he has the votes to pass the $2 billion expansion this time.

The first $1 billion ran out in about a week as consumers snatched up savings on an estimated 250,000 new cars.

The White House has warned that the popular program could run out of money by Friday if the Senate fails to act, and auto industry lobbyists have been pushing hard for the $2 billion infusion. The House approved the new money just before adjourning last week.

Most Senate Republicans oppose the program, arguing that it is another example of runaway spending by Mr. Obama and further government intrusion into the free market.

Still, the rebate program got a boost with the announcement Wednesday by Mr. Schwarzenegger.

In such a short amount of time, this program has proven its worth,” he said. “It has provided a much-needed economic boost and promoted the purchase of fuel-efficient vehicles that will protect consumers’ pocketbooks and our environment.”

Earlier in the day, Mr. Reid threatened to keep the Senate in session into the weekend to finish the bill, postponing the monthlong recess scheduled to begin Friday, if Republicans delay the vote. He has made similar threats before when recesses draw near since taking charge of the chamber in 2007.

Senate Minority Leader Mitch McConnell, Kentucky Republican, has said the vote would take place by Friday.

Mr. Reid argued that the program created jobs, boosted the embattled U.S. auto industry and fueled profits that will help repay taxpayer bailouts of automakers.

“That being said, there are some people who still don’t like the program,” he said on the Senate floor. “We have to figure a way to move through that.”

A Rasmussen Reports poll this week showed a majority of Americans — 54 percent — oppose expanding the program, compared with 33 percent supporting it and 13 percent unsure. Those figures are virtually identical to a June survey after Congress approved the original plan.

Beyond a quick, temporary jolt to consumer demand, analysts do not see a long-lasting impact on the industry or the economy from the “cash for clunkers” 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.

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