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House OKs $2 billion more for 'cash for clunkers'

But legislation to keep the program from running out of money faces a tougher time in the Senate. The Obama administration says rebate requests will be honored at least through Sunday.

August 01, 2009|Jim Puzzanghera and Martin Zimmerman

WASHINGTON AND LOS ANGELES — House lawmakers rushed to the rescue of the "cash for clunkers" program Friday, approving an additional $2 billion to keep the wildly popular initiative from running out of money. But its future beyond this weekend still remains a question mark.

The Obama administration promised consumers that rebate requests would be honored at least through Sunday to avoid damping enthusiasm for one of the most successful economic stimulus efforts yet. But the White House did not make any commitments beyond that, and the new money to keep the program alive faces a rougher road in the Senate next week.

The prospect of $3,500 to $4,500 in government cash to trade in an older gas guzzler for a more fuel-efficient vehicle had customers jamming showrooms in Southern California and nationwide. Some dealerships have stayed open until 3 a.m. to handle the demand.

"We just have all this new traffic. It's really good," said Jesus Machado, general sales manager at Toyota Scion of Glendale. "There's energy, excitement."

Meanwhile, confusion reigned as conflicting reports continued about whether the program would be shut down because it had nearly burned through its entire $1-billion budget in less than a week.

"It's like a pinball effect," said T.C. DuBose, a salesman at Galpin Ford in North Hills. "The customers, they're not in control, they're being bounced around: It's on, it's off, it's on, it's off."

President Obama tried to reassure consumers. He urged the Senate to act quickly to approve the additional funding and praised Friday's 316-109 House vote.

"Thanks to quick bipartisan responses, we're doing everything possible to continue this program and to continue helping consumers and the auto industry contribute to our recovery," Obama said. He added that "cash for clunkers" has succeeded "well beyond" expectations.

Automakers agreed, saying the program had provided a definite boost to sales, with some dealers reporting that about half of their showroom traffic this week has been cash-for-clunkers shoppers.

The overwhelming demand put the program in danger of shutting down. But the House voted to shift $2 billion into the program from another stimulus project -- a $6-billion loan guarantee fund for innovative renewable energy technology. Lawmakers moved unusually quickly before leaving Friday for their August recess.

"The American consumer has taken cash for clunkers on a test drive and . . . they want to continue this program," Rep. Steve Israel (D-N.Y.) said.

The Senate is planning to vote on the additional money next week before it also leaves Washington until September. Despite the strong bipartisan House vote, passage isn't assured. Sen. John McCain (R-Ariz.) has promised a filibuster, objecting along with some other fiscal conservatives to more government spending.

Other lawmakers have problems as well. Sens. Dianne Feinstein (D-Calif.) and Susan Collins (R-Maine) said they would not support the additional money unless the guidelines were toughened. They want newly purchased vehicles to get at least two miles more per gallon than the current eligibility requirements.

The National Automobile Dealers Assn. opposes any changes.

"You have a program which is an immense success . . . and you want to change it?" spokesman Bailey Wood said. "It doesn't make any sense."

He said the program was confusing enough for consumers, as well as dealers, who have had difficulty getting their complicated rebate reimbursement forms approved by the government.

Tougher fuel-efficiency standards aren't needed because evidence so far shows that consumers are opting for smaller, more fuel-efficient cars, Wood said.

Toyota said its three top-selling models through the program were the Corolla compact, the Prius hybrid and the four-cylinder Camry sedan. General Motors said sales of small, fuel-efficient cars, such as the Chevrolet Aveo and Pontiac G3, have jumped 55% since the program began.

"Clearly, there's a tremendous appetite for people to use this program to make deals for fuel-efficient cars," GM spokesman John McDonald said.

The confusion in Washington weighed on automakers as they fielded questions from dealers they often couldn't answer. But that didn't ruin the pleasure of showrooms bustling more than they have in nearly two years.

"For dealers, the whole thing has really been a bit disruptive," said Mike Michels, a spokesman for Toyota Motor Corp.'s U.S. sales arm. "But on balance, the dealers are happy to see the traffic and the business that it's generating."

Congressional supporters said the program was helping the economy more than they could have imagined, and warned against wasting the opportunity for a bigger jolt.

"It is the one thing that we have done here in this Congress that is absolutely working," Rep. John Campbell (R-Irvine) said. "It is creating jobs, and we want it to do more."

--

martin.zimmerman@latimes.com

jim.puzzanghera@latimes.com

Times staff writer Andrea Chang in Los Angeles contributed to this report.

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