Senate votes to extend Cash-for-Clunkers

DETROIT -- The Senate extended a cash-for-clunkers program Thursday night that some in the auto industry say could drive a recovery in their business, while others already worry that demand will fizzle as the pool of eligible buyers shrinks.

The Senate voted 60-37 to put another $2 billion into the program, officially the Car Allowance Rebate System, or CARS. It will allow consumers to get rebates of up to $4,500 until Labor Day, under current estimates.

The House already had approved putting $2 billion more into the program, which gives consumers up to $4,500 in federal subsidies for trading in cars that get less than 18 mpg and buying new cars with better fuel economy. The measure now goes to President Obama to sign.

The Transportation Department said the program's initial $1 billion probably has been spent. But a paperwork backlog has prevented an accurate accounting. The auto industry has estimated an additional $2 billion is enough to help consumers purchase half a million more new cars.

Supporters of the program have hailed its effect on the auto industry, which had its best month in nearly a year in July, and on reducing carbon emissions.

"The reality is this is a program that has been working," Sen. Debbie Stabenow, D-Mich., said. "Consumers believe it's working. Small-business people believe it's working. People who make steel and aluminum, and advertisers … and everyone who's involved in the larger economic impact of the auto industry believe it is working."

The legislation had its share of Senate critics, most of them Republicans.

"What we're doing is creating debt," Sen. Judd Gregg, R-N.H., said. "The bill to pay for those cars is going to come due on our children and grandchildren."

About 5 million potential buyers are out there eligible to trade in their "clunkers" for more fuel-efficient cars, says Mark LaNeve, vice president of North American sales, service and marketing for General Motors. But not all of those people can afford to buy a new car. Demand will start to slow, he says, even if the additional money is approved.