House Approves Additional $2B for 'Cash for Clunkers' to Continue

Lawmakers hope the money will be enough to keep the program afloat, for now.

July 31, 2009, 7:19 AM

July 31, 2009— -- The House hurriedly passed legislation today to add $2 billion in funding to the "Cash for Clunkers" program.

The vote was 316-109, and the bill now goes to the Senate, which remains in session for one more week. But the Senate will have to pass the exact same bill since the House goes into recess today and will not be around to participate in a conference to hash out differences.

President Obama praised Congress for its quick action and said he was "pleased with the progress" made in the House.

The program "has succeeded well beyond our expectations and all expectations, and we're already seeing a dramatic increase in showroom traffic at local car dealers," the president said in short remarks today about the economy.

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The program pays consumers cash vouchers if they trade in their gas-guzzling cars for a new car.

During the debate, many Republicans expressed their support for the program but said the government needs to fix several problems, including an online redemption system that has been overwhelmed by dealers trying to file claims.

But other GOP members were not so supportive.

"The auto industry does not have a monopoly on the hard times in this country," said Rep. Jeb Hensarling, R-Texas. Referring to the struggling chicken farm in his district, he proposed that the government should start a "'Cash for Cluckers' program and pay people to eat chicken."

Democrats argued that the program works in stimulating the economy and promoting environmentally-friendly vehicles.

The initial money allocated by Congress has disappeared so quickly is because "it is a sign that not only the program works ... but it's ... providing a meaningful jolt to our economic recovery efforts," said Rep. John Dingell, D-Mich.

Officials were working hard to gather money for the program, which has been so successful that the $1 billion allocated for it ran out within a week.

The $2 billion will be transferred from an untapped stimulus program, so technically, no new taxpayer money will be involved. But Obama today said that the government would work to replace the stimulus funding being used to extend the program.

Earlier today, the White House assured Americans that the "Cash for Clunkers" program "is up and continuing to run," at least through this weekend.

The developments came one day after conflicting government announcements that the program was broken and may, or may not, be suspended.

"We hope a lot of people go this weekend to... look at buying a new car," White House Press Secretary Robert Gibbs said. "We think that incentives are good for them."

"The administration is comfortable and confident that the money -- the previous money that was allocated through the supplemental appropriations is enough to cover those transactions and to continue operating the program," he said at his daily press briefing.

There are roughly 20,000 certificates waiting to be processed, but the White House could not definitively say if the money is totally tapped out.

House Speaker Nancy Pelosi, D-Calif, said an estimated 250,000 cars have been sold through the program.

"It's something we believe can, should and will be extended." Gibbs said, calling it a success for car buyers, dealers, companies and taxpayers, "who are seeing people choose more fuel-efficient cars."

He said the president not only wants the program to continue, he wants to see it expanded.

Lawmakers earlier today urged their constituents to take advantage of the program -- while it lasts -- and there was obvious uncertainty in Washington about the long-term future of the program.

"We don't know how long it will last, so people should go to their car dealers now if they want to take advantage of the program," Sen. Carl Levin, D-Mich., said in a statement. "We're also going to seek additional funding to hopefully make the program last longer."

Funds Running Out

"Cash for Clunkers" was supposed to continue through Nov. 1, 2009, or until the money ran out. Given the hit of the U.S. government's plan, which was designed to help the struggling auto industry, that money was guzzled up way before the fall time frame.

With the number of dealers participating, if each completed just a dozen "Cash for Clunkers" deals, the $1 billion would be spent. And some dealers have initiated more like 250 "Cash for Clunkers" deals -- 20 times what the government was expecting.

"It was the right idea, but it was the cart before the horse," Scott Addison of Fitzgerald Auto Mall in Gaithersburg, Md., told ABC News' Elisabeth Leamy. Addison's sales staff was rushing to process "Cash for Clunkers" transactions before the government slammed the brakes on the program.

On Thursday evening, the Department of Transportation told lawmakers it was suspending the "Cash for Clunkers" program at the stroke of midnight. But then later the White House said it was still working to find other options.

"We are working tonight to assess the situation facing what is obviously an incredibly popular program," Gibbs said of what officially is called the Car Allowance Rebate System. "Auto dealers and consumers should have confidence that all valid car transactions that have taken place to date will be honored."

The official Web site showed there was still $779 million left -- clearly not the case. Even "Cash for Clunkers" commercials are still running for a number of automakers.

Part of the problem? The government Web site dealers must use to enter clunker deals is a clunker itself, sputtering and stalling.

The computer crashes have caused a backlog: as many as 25,000 transactions that dealers have made but the government hasn't yet officially approved.

"They think they've given out this much, but there's a line this long trying to get in the door," said Addison.

"It was too good of a deal to pass up," said Greg Burge, one of the estimated 250,000 consumers trying to take advantage of the program, which gives as much as $4,500 dollars for trading in a gas guzzler for a more efficient brand new vehicle.

"I was sort of afraid that all of the money would be gone before then, so when they called and said that it came in early I was really happy," said Greg's wife Lori Burge.

'Cash for Clunkers' Guidelines

Here's how the "Cash for Clunkers" program works:

ABC News' Z. Byron Wolf and Elizabeth Leamy contributed to this report.