With a jump-start from car dealers and consumers, prospects are brightening for quick Senate action on a $2 billion fill-up for the "Cash for Clunkers" program.
Senate Republicans Tuesday conceded that they do not have the votes to defeat the popular program, which offers rebates of up to $4,500 to help people buy new, more fuel-efficient cars or trucks. Nor are they inclined to force a procedural fight into the August recess, expected to begin Thursday evening or Friday.
“Not enough people oppose it because people love to get $4,500 falling out of the sky on top of them, and dealers love it,” says Sen. Judd Gregg (R) of New Hampshire, the top Republican on the Senate Budget Committee and a leading fiscal conservative. “But it’s an outrage to fiscal integrity of the system to create a program where our children and grandchildren will have to pay [at least] $4,500 for a car being bought today.”
Facing the prospect of a loss on this bill in the Senate, the Obama administration flooded the Senate with new data about the program, which raced through its initial $1 billion, four-month funding cap in a week.
Clunker trade-ins to date have produced a gain in fuel efficiency of 9.6 miles per gallon, or 61 percent, according to the National Highway Traffic Safety Administration.
That report, released Monday, won over Sens. Dianne Feinstein (D) of California and Susan Collins (R) of Maine, who had threatened to vote against renewal of the program unless Congress wrote in higher fuel-efficiency standards.
Other Republicans reported hearing from local car dealers, who had already sold cars under the new federal rebate plan and were worried they would have to take the losses if the program folded.
“Many dealers are already into their fall promotions based on this program. We should honor the commitments we made,” said Sen. Jim DeMint (R) of South Carolina.
An outspoken opponent of the program, Senator DeMint says he’s recently heard from many auto dealers in his state who would be hurt if the program abruptly ended.
“A lot of dealers could go out of business because of this thing,” he adds, citing the case of a dealer who sold 100 cars on the assumption that the Cash for Clunkers program would be around until November and stood to lose $400,000 if the program were not extended.
On the Democratic side, freshman Sen. Claire McCaskill of Missouri says she needs assurances that there is a rational end to the program, even if it is extended, so that car dealers won’t eventually be left with deals that the government may not pay up on.
“Consumers and dealers need continuity and predictability,” she says. “That’s why most rebate programs specify an end date.”
Senator McCaskill says she’s also concerned that US companies may not have adequate inventories of fuel-efficient cars to meet the demand spurred by the program. “I want to be sure that we’re not chasing consumers into the arms of Toyota and Honda,” she says.
Meanwhile, Democratic leaders are still trying to work out an agreement with Republicans to move the bill to a floor vote.
If Republican amendments are allowed on the floor and pass, it would force the bill back to the House – but no sooner than September when the House reconvenes. “We’ll allow amendments as long as we can defeat them,” says Mr. Manley.
Over the years, car dealers have tended to support Republican candidates in federal elections. During the 2008 election cycle, employees of car dealerships and political action committees representing car dealers contributed some $9.2 million to federal candidates, committees, and parties, with 76 percent going to Republicans, according to the Center for Responsive Politics in Washington. During the 2004 presidential election cycle, they contributed nearly $10.6 million, with 80 percent going to Republicans.
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