- The Washington Times - Friday, August 7, 2009

The Senate passed a $2 billion expansion of the popular “cash for clunkers” program Thursday, overcoming a series of roadblocks thrown up by Republican amendments that would have stalled the automobile rebates until the fall.

The White House-backed program, which pays rebates of as much as $4,500 to consumers who trade in old gas-guzzlers for new fuel-efficient cars and requires car dealers to scrap the traded-in vehicles, passed in a 60-37 vote.

After the vote, President Obama thanked the Senate “for acting in a bipartisan way” in extending the program. “Businesses across the country - from small auto dealerships and suppliers to large auto manufacturers - are putting people back to work as a result of this program,” the president said in a statement from the White House.

The near party-line vote was almost identical to the Senate’s June vote to approve the original $1 billion funding for the program, and ensures a second wave of car buyers can tap the program designed to help the ailing auto industry and the environment.

Sen. Debbie Stabenow, Michigan Democrat, said the program not only culled gas-guzzling cars, but also was “the most effective stimulus we have passed this year.”

She said the program was a success and created jobs, boosted the embattled U.S. auto industry and fueled profits that will help repay taxpayer bailouts of automakers.

“We’re talking about stimulus. We’re talking about jobs. We’re talking about moving the economy forward,” Mrs. Stabenow said.

The fast action to pass the measure came a day before the Senate begins its August recess. The House passed the bill last week before it adjourned for the summer break.

The first $1 billion began to run out in about a week as consumers snatched up savings on an estimated 250,000 new cars. The startling popularity of the clunker rebates prompted the White House to call for an immediate cash infusion or else the program would go broke by Friday.

Still, criticism of the program abounds.

Economists warn the rebate incentive merely spurred early sales to consumers already in the market for a car; reports suggested the spike in demand depleted inventories and popular models - such as the Toyota Corolla and Ford Focus - will not be available for the second round of rebates; and a government report showed that more than half the new cars purchased with clunker rebates were foreign makes.

The critics ultimately appeared to be no match for a full-throttle lobbying drive by the White House, the automobile industry and Rust Belt lawmakers eager to keep the dollars flowing in their hardscrabble states.

“We found out people like free money. They like free money,” Sen. John McCain, Arizona Republican, said during the floor debate. “So, the program is going out of control.”

Mr. McCain and his fellow Republicans argued that the program was another example of runaway spending by Mr. Obama and further government intrusion into the free market. Mr. McCain jokingly suggested that a “cash for golf clubs” program also would stimulate the economy.

Other opponents, such as Republican Sen. Tom Coburn of Oklahoma, warned that the subsidies would not end at $3 billion because the program’s boosters would be back for more money.

“The interesting question is: When does it stop?” Mr. Coburn asked the chamber.

Any of the half dozen amendments offered Thursday would have killed the clunker program, since the rebate money would have run out while awaiting the House to return in September to address the revised bill.

They included measures to halt the program until the government establishes a system for tracking the rebate payments and to bar the $2 billion expansion from increasing the federal debt. If any succeeded, the program would run out of rebate money while awaiting the House to return in September from its summer break to take up the revised bill.

Each fell as a result of solid Democratic opposition.

Sen. Carl Levin, Michigan Democrat, warned that the amendments, regardless of how appealing they may look, would be the “death knell” for the rebate scheme.

“This program is designed to be a one-time stimulus, not a stop-and-start deal,” he said.

An amendment by Sen. Tom Harkin, Iowa Democrat, would have limited the program to low-income car buyers.

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 who were unsure. Those figures are nearly 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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