House OKs Funding Increase For Cash for Clunkers

Staff and Wire Reports

OKLAHOMA CITY -- The House voted Friday to rush $2 billion into the popular but financially strapped "cash for clunkers" car purchase program, heeding calls from consumers who hope to keep taking advantage of the trade-in incentives.

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.

President Barack Obama said he was encouraged by the House action to keep alive a program that had "succeeded well beyond our expectations."

Rep. Steve Israel, D-N.Y., said of the program: "This is a test drive, and people bought it big time."

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.

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.

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."

Dealerships across the country saw the surge in sales just hours after the Cash for Clunkers program went into effect on Saturday.

Marta Sullins said she couldn't resist the government-backed credit toward a new vehicle even though her current ride runs fine.

"I don't consider it a clunker. It runs good. I keep it up. It's just this incentive that has me, checking and looking into it," Marta Sullins said.

Chuck Frizzel with David Stanley Dodge said he is not surprised by the funding problems.

"It's been such an overwhelming program," he said. "We sold a lot of Caravans, a lot of Journeys, a lot of Calibers, Avengers, a little bit of everything. We got a lot of vehicles that qualify for the Cash for Clunkers program."

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More information on the government's Cash for Clunkers rebate program | 'Cash for Clunkers' Driving Cars off Dealerships' Lots | Dealing with Cash for Clunkers' Junkers