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'Cash-for Clunkers' Funding to Pass This Week: Reid

Legislation to inject more money into a popular "cash-for-clunkers" program aimed at increasing U.S. automobile sales will pass the Senate before the start of a month-long recess at the end of this week, Senate Majority Leader Harry Reid said Tuesday.

Reid made his remarks to reporters after he and other Senate Democrats met with President Barack Obama to discuss expanding this program and unrelated healthcare legislation.

AP

Senate approval of a House-passed measure would send a $2 billion extension of the program to the White House for President Barack Obama's signature.

But there were questions. Republicans said Reid would have to let them offer changes that could slow the dramatically measure's progress.

Uncertainties aside, the comments by Reid and Senate Republicans added up to a potential path to passage for legislation extending the program before it runs out of money at the end of the week, when the Senate recesses.

"We'll pass cash for clunkers before we leave here," Reid told reporters after the Democrats lunched with Obama. Reid did not specifically mention the House-passed bill or whether he would allow Republicans to propose amendments as they're demanding.

Back on Capitol Hill at midday, Sen. Jim DeMint, a conservative Republican from South Carolina, told reporters he did not intend to block the legislation. "It's not my intention right now," he said.

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Democrats as well as Republicans had raised concerns about an extension of the program, and it was not clear how those problems might be dealt with in future bills. Some lawmakers wanted tougher emissions standards, and some Democrats said the program should be limited to lower-income car-owners. Republicans raised concerns about cost.

Under the program, car-owners may trade in their old models for new cars that achieve significantly higher gas mileage. The federal subsidies total up to $4,500.

Transportation Secretary Ray LaHood said the popular program has allowed thousands of Americans to buy new cars at time when the economy is still in recession and needs a boost in consumer spending.

"I think the last thing any politician wants to do is cut off the opportunity for somebody who wants to get a rebate to buy a new automobile," said LaHood, a former Republican congressman from Illinois.

Republican Sen. Lindsey Graham of South Carolina predicted that the Senate would approve it. "I hope it comes out of the stimulus program and doesn't add to the debt," Graham said in an interview on NBC's "Today" show. "I think the Senate will act this week and get some of the clunkers off the road."

On Monday, the White House had warned that the program could come to an abrupt halt Friday if the Senate didn't act favorably on a bill passed by the House last week transferring $2 billion to the program from an economic stimulus account that had been set aside to subsidize renewable energy. The infusion of new money would carry the program through September, said White House Press Secretary Robert Gibbs.

Through early Tuesday, the clunkers program had recorded 157,000 transactions worth $664 million. Eighty-three percent of the vehicles traded in were trucks or SUVs, while 60 percent of the vehicles purchased were passengers cars, for an average increase in fuel efficiency of 61 percent, he said.

Backers of the program picked up support Monday from three lawmakers who wanted the program limited to the purchase of even more fuel-efficient vehicles.

The fuel efficiency gains helped sway Democrats Dianne Feinstein of California and Chuck Schumer of New York, and Republican Susan Collins of Maine, who had complained that smaller rebates of $3,500 were going to people buying new cars that get as little as 4 more miles per gallon than the gas-guzzlers they traded in.

The three said administration officials told them an additional 100,000 to 130,000 were expected to be processed to reach the $1 billion set aside. The additional $2 billion was expected to generate sales of perhaps a half-million more vehicles.

Car companies said the clunkers program was helping their bottom lines. Ford said its sales rose 2.4 percent in July from the same month last year, its first year-over-year increase since November 2007, while Chrysler Group LLC posted a smaller year-over-year sales drop compared with recent months, helped by "clunkers" deals. Other automakers showed gains, giving ammunition to supporters of the car rebate program.

The Ford Focus is a leading replacement vehicle. General Motors, Chrysler Group LLC and Ford accounted for 47 percent of the new vehicles purchased.

Most consumers are buying smaller, more fuel efficient vehicles under the program, according to a list of the top-10 selling cars released by the National Highway Traffic Safety Administration, which is administering cash for clunkers.

That includes Honda Civics, Toyota Corollas and Dodge Calibers. The Toyota Prius hybrid, which gets 46 miles per gallon according to EPA estimates, is the fourth best-selling car. There is one SUV on the list, the Ford Escape, which also comes in a hybrid model that can get up to 32 miles per gallon.

Many Republicans remained skeptical, raising objections to the additional costs amid questions about the management of the overwhelmed car rebate program. The GOP holdouts said the government has failed to provide enough data about how well the initial funding has worked and should wait until the fall to provide more.

Many dealers said they were concerned they could be on the hook for some of the money if the Senate fails to act. John McEleney, chairman of the National Automobile Dealers Association, said his organization was warning dealers there were no guarantees they would be reimbursed for sales they make under the program this week. McEleney said he has stopped offering cash-for-clunkers deals at his own Iowa dealerships.

But dealers are still trying to lock up more money. NADA and the American International Automobile Dealers contacted thousands of dealerships, telling them to bombard the Senate with phone calls and e-mails.

Car dealers typically support Republicans and are a potent political force, contributing more than $9 million to federal candidates for the 2008 elections.

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