LaHood Says Clunker Program Will Keep Rolling

Aug. 4, 2009 -- Transportation Secretary Ray LaHood adamantly declared today that the Cash for Clunkers program will continue, calling the initiative a "win, win" and stating his belief that the Senate will pass a bill before the program runs out of money this week.

"This program is going forward. I am confident the Senate will pass $2 billion and we will continue seamlessly for people to buy automobiles," Lahood said during a news conference. "We have enough money to continue. We encourage people to go into showrooms. This is a wildly popular program. I want people to go buy automobiles and the money will be there to be reimbursed by the dealer."

President Obama got his chance to make his pitch for the "Cash for Clunkers" bill today over a White House lunch to which all 60 Senate Democrats were invited.

Following the lunch, Senate Majority Leader Harry Reid was confident the cash-strapped incentive program would have the votes to pass by the end of the week.

"We'll pass Cash for Clunkers," Reid said adding that it would be before the Senators leave for their August recess on Friday.

Following a lunch meeting with other Republicans, Minority Leader Mitch McConnell predicted a vote by the end of the week, but declined to predict that the Senate will agree to refuel the program.

"Senator Reid and I will be starting to talk about how to process Cash for Clunkers... What we'll be negotiating over is the appropriateness of some amendments to the bill, but I would anticipate that the matter will be completed sometime before the end of the week," McConnell said.

The president wants the popular program extended before it runs out of money this week and Senate goes on a summer recess, but some senators -- even Democrats -- don't like the program.

During a news conference called to address the dangerous combo of driving and texting, LaHood answered questions about the measures the Department of Transportation plans to take to promote the Cash for Clunkers program.

"We're going to make ourselves available to any senator," said LaHood, who sent a letter to every senator offering to answer their questions about the program. "It's a two page letter that outlines the importance of this program, that it's a lifeline, that it's a wildly popular program and a lifeline to the automobile industry."

The transportation secretary said the program, as of today, has produced 157,000 transactions worth $664 million and "continues to show a 61 percent increase in fuel efficiency from the car traded in... 83 percent of the vehicles traded in were trucks and SUVs, and 60 percent of vehicles purchased were passenger cars."

LaHood described the Clunker program as a stimulus project that works.

"This is the one stimulus program that I believe as has been the most popular because the money gets out quickly. The car purchaser gets the money in the form of a rebate, the car dealer sells automobiles, car salesmen are flooded with people trying to buy automobiles and so, this is an extraordinary way to really give a boost to our economy," he said.

But, many senators remain unconvinced.

"Why not $4,500 for refrigerators or other businesses around my state?" asked Sen. Claire McCaskill, D-Mo. "So I just think that we have to be careful that we don't go too far with this program."

McCaskill also wants to know how much of the money is going to buy foreign cars.

The answer came later today when the Department of Transportation released sales figures showing that four of the top five cars bought under the program were foreign models.

The top seller was the Ford Focus, followed by Toyota Corolla, Honda Civic, Toyota Prius and Toyota Camry.

The Ford Escape is number six, followed by Hyundai Elantra, Dodge Caliber and the Honda Fit. The only car from General Motors to make the Top 10 list is the Chevrolet Cobalt, coming in at number 10.

Republicans say the government needs to stay out of the auto market.

"The federal government should not be running the used car business. This is a horrible policy idea," Sen. Jim DeMint, R-S.C., told ABC News. "And the fact that people buy cars when you give them free money does not mean that is what the federal government should be doing."

But while there's no guarantee that the Senate will sign off on the $2 billion the House of Representatives authorized for the program on Friday, it looks more than likely that the clunkers program will be salvaged.

The bill cleared a major hurdle late Monday when two senators, Dianne Feinstein, D-Calif., and Susan Collins, R-Maine, lifted their objections to the House's emergency bill to pump for funding into the popular program.

Feinstein and Collins had opposed extending the bill unless the fuel efficiency standard for eligible cars was raised. They said they changed their minds because the roughly 250,000 people who took advantage of the program bought cars that get 9 miles per gallon better gas mileage than the clunkers they traded in.

"The statistics are much better than everyone thought," Feinstein said during a Capitol Hill press conference Monday. "It's much more fuel efficient than anyone thought it would be," she said.

GOP Fighting Clunkers Program

As it rushed to get out of town for the August recess, the House voted last week to add $2 billion to keep the Cash for Clunkers program afloat.

But the Senate, in session for one more week, hadn't seemed to be in much of a hurry, and that alone is enough to put the program's future in doubt.

The program, which pays consumers cash for trading in gas guzzling cars for fuel efficient new cars, turned out to be wildly popular. Officials now say without more funding the program will be out of cash by midweek.

"I think if it doesn't happen this week, it's unlikely that we'll make it to the weekend with a program that can continue," said White House press secretary Robert Gibbs during the White House briefing Monday. Gibbs estimated that an additional $2 billion in funding could stretch the program through September.

Backed by the president, more money for the car incentive plan can be reprogrammed from stimulus funds, but unless there is unanimous consent in the Senate -- that is, unless every senator agrees -- it will take at least three days to get a bill on the schedule and the Senate's August recess is due to begin Friday.

But some liberals still think the mileage requirements are too lax and conservatives, including Sen. John McCain, R-Ariz., say the program is a boondoggle and amounts to another bailout of the auto industry.

Already on the Senate's plate heading in to August recess is the confirmation of Supreme Court nominee Sonia Sotomayor and a tourism-promotion bill that is one of Reid's top priorities.

However, even if the Cash for Clunkers bill were to make it to the Senate schedule this week, the program may be completely out of money. At that point, if any of the amendments expected to be offered pass, the newly-amended program would have to be reconciled with the bill that passed the House of Representatives who have already adjourned for August recess.

On C-SPAN Sunday, Transportation Secretary Ray LaHood said he had "great faith" that the Senate would pass the bill.

"We will continue the program until we see what the Senate does," he said. "I have great faith that the Senate will pass this."

The White House has assured dealers that they will be reimbursed for any deals closed over the weekend, but, in the meantime, car dealerships that continue to offer the government's incentive are doing it on faith.

In Friday remarks about the economy, Obama said 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."

Crunching the Clunkers Numbers

Citing unreleased National Highway Traffic Safety Administration data given to their staffs, Feinstein and Collins said consumers taking advantage of the clunkers program have bought more fuel efficient vehicles than they had to.

Feinstein and Collins, two original sponsors of the measure, were frustrated when its fuel economy requirements were watered down and last Friday demanded tougher fuel economy requirements in order to pass the legislation.

But they pointed to numbers given to their offices by the NHTSA, which showed that of the 120,000 sales so far, the average fuel economy for a purchased car was 25.4 mpg. For cars it was over 28 miles, for SUVs over 21 and for trucks over 16.

While 34 percent of consumers receiving the credits bought SUVs and minivans, Feinstein said 83 percent of the vehicles turned in were trucks and SUVs, and the average refund being given was $4,327. She said NHTSA expects another 130,000 cars can be bought through the program before it reaches $1 billion.

Collins said she had urged GOP leaders to work with Senate Majority Leader Harry Reid, D-Nev., to come to an agreement to allow a vote to occur this week. All senators must agree to the vote for it to happen. But with a summer recess looming, peer pressure against objecting could be high.

Sen. Charles Schumer, D-N.Y., who also appeared at the press conference with Collins and Feinstein, said he expected any vote on the clunkers bill passed by the House would require 60 votes.

"The bottom line is if it ain't broke, don't fix it," Schumer said, making full use of car metaphors. "It's working in every way. It's working as a stimulus, it's working to help families, it's working to improve mileage. What we need to do here is not put on the brakes, but step on the gas."

ABC News' Lindsey Ellerson contributed to this report.