WASHINGTON – The House has voted to rush an additional $2 billion into the popular but financially strapped "cash for clunkers" car purchase program.
The bill was approved on a vote of 316-109. House members acted within hours of learning from Transportation Secretary Ray LaHood that the program was running out of money.
Called the Car Allowance Rebate System, or CARS, the program is designed to help the economy and the environment by spurring new car sales. Car owners can receive federal subsidies of up to $4,500 for trading in their old cars for new ones that achieve significantly higher gas mileage.
House Majority Leader Steny Hoyer said the new money for the program would come from funds approved earlier in the year as part of an economic stimulus bill.
THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.
WASHINGTON (AP) — The House rushed Friday to pump $2 billion into a popular cash-for-clunkers program running near empty, with a leading Democrat saying "consumers have spoken with their wallets."
A floor vote was under way at midday on the bill to refuel the car-purchase program. House Majority Leader Steny Hoyer had said earlier that the additional money would come from funds Congress approved earlier in the year as part of a $787 billion economic stimulus bill.
Hoyer, D-Md., said that at the request of House Republicans — whose approval was required for swift passage — the bill would include provisions for government auditors to make sure the money was being spent as intended.
Republicans argued that Democrats were trying to jam the legislation through.
House Minority Leader John Boehner said it was unclear how many Republicans would support on the plan.
"There are a lot of questions about how the administration administered this program. If they can't handle something as simple as this, how would we handle health care?" the Ohio Republican told The Associated Press.
House Speaker Nancy Pelosi, D-Calif., said the cars purchased under the program were much more fuel-efficient than what the bill requires.
But some lawmakers complained that many dealers were left to contend with a chaotic government-run program.
"The federal government can't process a simple rebate. I've got dealers who have submitted the paperwork three times and have gotten three rejections," said Rep. Pete Hoekstra, R-Mich. "What is a dealer supposed to do?"
There had been a $1 billion budget for rebates for new car sales in the program that was officially launched last week and has been heavily publicized by automakers and dealers.
Called the Car Allowance Rebate System, or CARS, the program offers owners of old cars and trucks $3,500 or $4,500 toward a new, more fuel-efficient vehicle, in exchange for scrapping their old vehicle. Congress last month approved the plan to boost auto sales and remove some inefficient cars and trucks from the roads.
The Senate was not scheduled to vote on Friday but lawmakers hoped to win approval for additional funding next week.
Senate action is likely next week, making sure the program would not be affected by the sudden shortage of cash.
"Consumers have spoken with their wallets and they've said they like this program," said Rep. David Obey, D-Wis.
House members acted within hours of learning from Transportation Secretary Ray LaHood that the program — designed to help the economy as well as the environment — was out of funds. Under the program, car owners can receive federal subsidies of as much as $4,500 if they trade in their old car for a new one that achieves significantly higher gas mileage.
Sen. Carl Levin, D-Mich., said the administration assured lawmakers that "deals will be honored until otherwise noted by the White House." But he suggested that "people ought to get in and buy their cars."
At the White House, press secretary Robert Gibbs sought to assure consumers that the program is still running and will be alive "this weekend. If you were planning on going to buy a car this weekend, using this program, this program continues to run."
Gibbs would not commit to any timeframe beyond that.
It was unclear how many cars had been sold under the program.
Sen. Debbie Stabenow, D-Mich., said about 40,000 vehicle sales had been completed through the program but dealers estimated they were trying to complete transactions on another 200,000 vehicles, putting the amount of remaining funding in doubt.
John McEleney, chairman of the National Automobile Dealers Association, said many dealers have been confused about whether the program will be extended and for how long. Many had stopped offering the deals Thursday after word came out that the funds available for the refunds had been exhausted.
The clunkers program was set up to boost U.S. auto sales and help struggling automakers through the worst sales slump in more than a quarter-century. Sales for the first half of the year were down 35 percent from the same period in 2008, and analysts are predicting only a modest recovery during the second half of the year.
With so much uncertainty surrounding the program, North Palm Beach, Fla., dealer Earl Stewart said he planned to continue to sell cars under the program but would delay delivering the new vehicles and scrapping the trade-ins.
"It's been a total panic with my customers and my sales staff. We are running in one direction and then we are running in another direction," he said.
AP Business Writer Stephen Manning in Washington contributed to this report.
Worse, a lot of the cars that are eco-unfriendly are classics that would be better refurbished and made more fuel efficient than just destroyed. How about cash for conversion?
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