Senate Votes to Give a Tax Break to New Car Buyers

Senate Minority Leader Mitch McConnell of Ky,. discusses the Republican viewpoint on the economic stimulus package as he meets with reporters on Capitol Hill in Washington, Monday, Feb. 2, 2009. (AP Photo/J. Scott Applewhite)

(AP)

The Senate voted Tuesday to give a tax break to new car buyers, setting aside bipartisan concerns over the size of an economic stimulus bill with a price tag edging above $900 billion. The 71-26 vote came as President Barack Obama said he lies awake nights worrying about the economy and signaled he'll try to knock out "buy American" provisions in the legislation to avoid a possible trade war.

Sen. Barbara Mikulski led the successful effort to allow many car buyers to claim an income tax deduction for sales taxes paid on new autos and interest payments on car loans.

She said the plan would aid the beleaguered automobile industry as well as create jobs at a time the economy is losing them at a rapid rate. "I believe we can help by getting the consumer into the showroom," she said.

The provision was attached to the economic stimulus bill at the heart of Obama's economic recovery plan and is subject to change or even elimination as the measure makes its way toward final passage.

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Democratic leaders have pledged to have the bill ready for his signature by mid-month, and in a round of network television interviews, the president underscored the urgency. He told CNN that even three months ago, most economists would not have predicted the economy was "in as bad of a situation as we are in right now."

He also spoke out against efforts to require the use of domestic steel in construction projects envisioned in the bill, telling Fox News, "we can't send a protectionist message."

The stimulus bill remains a work in progress, following last week's party-line vote in the House and an Oval Office meeting on Monday in which Obama and Democratic leaders discussed ways to reach across party lines.

In a series of skirmishes during the day, the Senate turned back a proposal to add $25 billion for public works projects and voted to remove a tax break for movie producers. Both moves were engineered by Republicans who are critical of the bill's size and voice skepticism of its ability to create jobs.