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Senate Poised to Add $2 Billion to ‘Clunkers’ Program (Update1)

By Angela Greiling Keane


Aug. 5 (Bloomberg) -- The U.S. Senate is poised to inject $2 billion into the “cash for clunkers” program, as Democrats secured enough support to pass the measure and Republicans said they won’t block a vote.

Senate Majority Leader Harry Reid, a Nevada Democrat, said he expects to reach an accord with Republicans that would allow the Senate to approve the money this week. If no agreement on timing is reached, Reid said he will try to pass a procedural motion that would force a final vote over this weekend.

Reid said today there is “a significant majority” of senators who want to extend the program, which ran through about $1 billion in its first week while boosting auto sales nationwide. Transportation Secretary Ray LaHood said the added funding would keep the program going through August.

Some Republican senators want to alter the legislation passed by the House last week to set a time limit on the program, which gives consumers discounts for trading in older vehicles for new, more fuel-efficient models.

“There is a belief this will continue to grow and grow and grow and $2 billion may not be enough” unless limits are imposed, Senator John Thune, a South Dakota Republican, told reporters.

Democrats were seeking an agreement to pass the measure without changes, because any alterations to the legislation the House passed July 31 would force a suspension in the program until the House could vote on the revisions when it returns from a monthlong recess Sept. 8.

Republican Leader

Republican leader Mitch McConnell, a Kentucky Republican, said yesterday the Senate will vote on the proposal “before the end of the week.”

Senator Carl Levin, a Michigan Democrat, said the vote may come as early as tonight.

The government’s Car Allowance Rebate System provides credits to buyers of as much as $4,500 for the purchase of a new, more fuel-efficient vehicle when they turn in an older car or truck to be junked.

Automakers and dealers are pushing the Senate to pass the measure, saying the program is a success. Ford Motor Co., the only major U.S. automaker that hasn’t received direct U.S. government aid, posted its first monthly sales gain since 2007 in July, the month the clunkers program began.

Ford’s Focus was the top seller so far under the program, followed by Toyota Motor Corp.’s Corolla, Honda Motor Co.’s Civic and Toyota’s Prius and Camry, data from the Transportation Department showed this week.

A Backlog

The Transportation Department had received about 157,000 dealer applications for funds totaling $664 million, as the agency works through a backlog that reached hundreds of thousands of online submissions, LaHood told reporters.

Vehicles made by the three largest U.S. automakers -- General Motors Co., Ford and Chrysler Group LLC -- comprised fewer than half of sales under the program through Aug. 1, according to the Transportation Department data obtained Aug. 3. The companies accounted for 47 percent of the clunkers transactions.

The data didn’t break out where the cars sold were manufactured. Some vehicles sold by foreign companies are manufactured in the U.S.

To contact the reporters on this story: Angela Greiling Keane in Washington at agreilingkea@bloomberg.net;

Last Updated: August 5, 2009 10:41 EDT

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