House easily passes 'cash for clunkers' lifeline

The House on Friday swiftly passed a $2 billion emergency measure to keep afloat the “cash for clunkers” automobile trade-in program, a day after learning that it had run out of its initial funds in just over a week.

The bill easily passed even with a two-thirds majority mandate after Democratic leaders scrambled Friday morning to come up with a proposal to keep the program running, and then to ready the bill for the floor.

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Time was of the essence for the House not only because of how quickly and unexpectedly the program’s $1 billion got spent on consumer rebates for new, fuel-efficient vehicles, but also because the House on Friday morning was hours away from adjourning for the month of August.

Had they failed to act, the popular program allowing consumers to trade in older cars for newer ones and receive a $4,000 to $5,000 rebate – which dealers across the country had credited with a much-needed spike in sales – would have been in serious jeopardy, and just when members were about to return to their districts.

In response, on Friday morning House Majority Leader Steny Hoyer (D-Md.) and Appropriations Committee Chairman David Obey (D-Wis.) came up with a plan to steer $2 billion – double the amount originally appropriated – in economic stimulus funds to keep “cash for clunkers” alive in at least the short term.

Democrats argued that the source of the funds was appropriate, given how quickly the first $1 billion was used to jump-start a crippled auto industry and spur consumer spending.

“Clearly, consumers have spoken with their wallets,” Obey said.

But many Republicans cried foul, objecting to the diverting of stimulus funds without a closer examination of both programs, the haste with which Democrats brought up their proposal and the merits of the plan itself.

“The auto industry does not have a monopoly on hard times in this economy,” said Rep. Jeb Hensarling (R-Texas).

Even some Michigan Republicans who supported the measure couldn’t resist firing criticism at congressional Democrats and the Obama administration.

Rep. Pete Hoekstra (R-Mich.) said he had heard numerous complaints from car dealers in his district over the implementation of the program, which he said was riddled with bureaucratic problems.

“We need to get these back-room problems fixed in order to truly call this program a success,” Hoekstra said.

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Auto companies and dealerships had originally sought $4 billion from Congress for the program, hoping to use it to sell 1 million new cars.

And the original bill set off a debate between auto-state senators hoping to provide support for the car industry and  senators from the East and West coasts, who had supported an alternative that had higher environmental standards.

But industry sources say senators are working on a similar $2 billion lifeline before the upper chamber recesses next week.

Sens. Dianne Feinstein (D-Calif.) and Susan Collins (R-Maine), who had pressed for the alternative bill with higher fuel-efficiency standards, sent a letter on Friday to the Transportation Department asking for more detailed information about the "cash for clunkers" program and how it had run out of money.

"Congress needs this data in order to determine if the fleet modernization program delivered significant fuel economy gains and oil savings," they wrote.

President Obama urged the Senate to pass similar legislation extending the program. He called "cash for clunkers" an "overwhelming success" and said it was part of the rest of his efforts to spur on an economic recovery.

"It has given consumers a much needed break, provided the American auto industry an important boost, and is achieving environmental benefits well beyond what was originally anticipated," Obama said in a statement. 

Walter Alarkon contributed to this report

This story was updated at 4:05 p.m.