House Votes for $2 Billion Fund to Extend ‘Clunker’ Plan

From The New York Times:

By MATTHEW L. WALD
Published: July 31, 2009

WASHINGTON — The House of Representatives voted to provide an emergency $2 billion for the “cash for clunkers” program on Friday, and the White House declared the program very much alive, even though new-car shoppers appear to have already snapped up all the $1 billion that Congress originally appropriated for it.

The House shoved other business out of the way on its last day before the August recess to rush through a measure to address the cash shortage of the car program. The vote was 316 to 109, with significant support from Republicans as well as Democrats.

The Senate, which will be in session next week, will take up the program then. A spirited debate is likely, as some senators are expected to use the opportunity to push for tougher fuel-efficiency requirements. If the Senate does not go along with the House’s version, the House might have to return to work on a compromise.

The sudden legislative action was prompted by the overwhelming response to the program, formally known as the Car Allowance Rebate System, which its backers say has helped not only car-buyers but the struggling American automobile industry.

Earlier Friday, Robert Gibbs, the chief White House spokesman, offered assurances that the administration was looking for ways to continue the popular new program, which offers $3,500 to $4,500 for people who trade in an old car for a new one with higher fuel economy.

“If you were planning on going to buy a car this weekend using this program, the program continues to run,” he said. “If you meet the requirements of the program, the certificates will be honored.”

Mr. Gibbs declined to say how long the program could continue without an infusion of funds.

“We feel confident that we’ll have a solution that people can agree on moving forward, and that the program continues,” he said.

The $2 billion infusion approved by the House would come from money already set aside for an Energy Department’s loan guarantee program and give it to the rebate program.

“Consumers have spoken with their wallets,” Representative David R. Obey, Democrat of Wisconsin of chairman of the House Appropriations Committee, said in urging quick passage.

The panel’s ranking Republican, Jerry Lewis of California, complained that Democrats, who have a 256-to-178 majority in the House, were rushing the measure through with too little thought, let alone debate — “shoveling another $2 billion out the door,” in his words.

But in the end, there was enough support from Republican in states that rely on the auto industry to speed the measure along.

Before the House vote, Senator Carl Levin, Democrat of Michigan, said it was not clear how long funds for the program would last, “so people should go to their car dealers now if they want to take advantage of the program.

Representative Steve Israel, Democrat of New York, predicted that $2 billion would be enough until Congress returns in September. But he added, “there’s going to be a lot of confusion among consumers. We need to wrap this up today.”

The program has proved a boon to the battered auto industry as it struggles to regain its footing, drawing crowds of customers to some showrooms as dealers aggressively promoted the rebates in ads over the last week.

Representatives of the nation’s car dealers said Thursday that they had been told by the Transportation Department to stop offering the rebates because the funds had been quickly exhausted.

But a White House official then said the program had not been suspended, creating confusion about its status.

There was wide support for an additional appropriation for “cash for clunkers,” with members of the Michigan delegation in the forefront. But support was not unanimous and some members of Congress thought the requirements should be tightened.

Senators Dianne Feinstein, a California Democrat, and Susan Collins, a Maine Republican, said in a joint statement that “we will insist that any extension of the program requires that the minimum fuel economy improvement for newly purchased vehicles be at least two miles per gallon higher than it is under the enacted Clunkers program.” For cars, the current minimum improvement is five miles a gallon. And, they said, to help low-income car owners take part, they would include vouchers for fuel-efficient used vehicles.

But Representative Ed Markey of Massachusetts, one of the authors of the original bill, called for a simple extension. He declared Thursday night, “Cash for Clunkers may have run out of cash, but America’s consumers haven’t run out of clunkers.” He said it should be extended to cover 1 million vehicles, about four times the number covered so far.

Helene Cooper contributed reporting from Washington, and Micheline Maynard from Detroit.