Senate reaches deal to extend ‘Clunkers’ program

Senators reached a deal tonight to save the dwindling "Cash for Clunkers" program, agreeing to pump $2 billion more into the popular rebate program.

Senate Majority Leader Harry Reid (D., Nev.) announced the accord after long negotiations between Democratic and Republican lawmakers on Capitol Hill.

He said the agreement "accomplishes what we need to accomplish."

The Senate is to vote tomorrow on extending the program before starting its monthlong summer recess.

Reid had warned his colleagues today that if the measure did not reach a floor vote by tomorrow, he would file motions to close debate. Under Senate procedure, that could have meant a floor vote Friday or Saturday. Or the Senate could have voted as is on the House version that passed last week and been done with it.

Tonight's development will prevent the need for that and was a clear signal that Reid had marshaled the votes needed to push the measure through the Democratic-controlled Senate.

The government says more than $775 million of the original $1 billion allotted for the program has been spent.

Reluctant senators, including Dianne Feinstein (D., Calif.), were won over to support the $2 billion extension earlier this week to keep the program running until September.

Under the program, consumers get credit toward the purchase of new, more fuel-efficient vehicles in exchange for their older gas-guzzlers. The amount of the credit depends on the level of gas-mileage improvement. A gain of 4 to 9 miles per gallon earns a $3,500 credit, and one of 10 miles per gallon or more earns a $4,500 credit.

Dealers get reimbursed for the credits by the National Highway Traffic Safety Administration, which is operating the program.

The $2 billion is the amount President Obama said was necessary to meet a surging demand that would otherwise deplete the program by Friday. Transportation officials said there were estimates that as many as 300,000 vehicles had been bought under the program since it began July 24.

The program, also known as the Car Allowance Rebate System (CARS), has been sputtering along, a victim of its own success, because consumer demand has far exceeded expectations.

Nationally and locally, dealers have complained of tapped-out inventories and growing concern that they will not be reimbursed if the additional funding falls through.

"That's good news," Kevin Mazzucola, executive director of the Auto Dealers Association of Greater Philadelphia, said of the Senate's reaching an agreement tonight. "With this passage, there is continued certainty of funds being available to keep the momentum going that was derived in just a short period of time."

The House approved a $2 billion extension Friday. Proponents of the program said it would die by week's end if the Senate failed to do the same.

"The program has proved to stimulate auto sales, but more important, it's helped put safer cars with better mileage on the road," said Ami Gadhia, policy counsel for the Consumers Union, the nonprofit publisher of Consumer Reports magazine. The group has urged the Senate to keep the program running.

But Jamie Van Nostrand, executive director of Pace Law School's Energy and Climate Center, said the program did not go far enough toward protecting the environment. He likened "Cash for Clunkers" to nothing more than a bailout for the U.S. auto industry.

"If we want to provide further economic stimulus for the auto industry, the 'Cash for Clunkers' program is a resounding success," he said. "If we really want to provide financial incentives for energy and environmental benefits, however, make the fuel-efficiency improvements more rigorous."