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The Honolulu Advertiser
Posted on: Friday, August 7, 2009

Senate's vote clears $2B more for 'cash for clunkers'


By David Espo
Associated Press

Hawaii news photo - The Honolulu Advertiser

The clunkers turned in for subsidies become scrap metal at places like Gershow Recycling Corp. in Medford, N.Y.

MARK LENNIHAN | Associated Press

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WASHINGTON — Pedal to the metal, Congress sent President Obama legislation last night with an additional $2 billion for "cash for clunkers," the economy-boosting rebate program that caught the fancy of consumers and instantly increased sales for an auto industry mired in recession.

The Senate approved the money on a 60-37 vote after administration officials said an initial $1 billion had run out in only 10 days.

Hawai'i Sens. Daniel Akaka and Daniel Inouye, both Democrats, supported the bill.

The House voted last week to keep alive the program, which gives consumers up to $4,500 in federal subsidies if they trade in environmentally unfriendly older cars for new, more energy-efficient models.

Without action, lawmakers risked a wave of voter discontent as they left the Capitol for a monthlong vacation.

"Cash for clunkers has been a proven success," Obama said in a written statement issued shortly after the vote. "The initial transactions are generating a more than 50 percent increase in fuel economy; they are generating $700 to $1,000 in annual savings for consumers in reduced gas costs alone, and they are getting the oldest, dirtiest and most air-polluting trucks and SUVs off the road for good."

Senate supporters of the program hailed its effect on the auto industry — which had its best month in nearly a year in July — as well as its claimed environmental benefits.

"The reality is this is a program that has been working. Consumers believe it's working. Small-business people believe it's working. People who make steel and aluminum and advertisers ... and everyone who's involved in the larger economic impact of the auto industry believe it is working," said Sen. Debbie Stabenow, D-Mich.

The legislation has its share of critics, though, most of them Republicans.

"What we're doing is creating debt. ... The bill to pay for those cars is going to come due on our children and grandchildren," said Sen. Judd Gregg, R-N.H.

Officials said the program's initial $1 billion probably already has been spent, but a paperwork backlog prevented an accurate accounting.

The additional $2 billion is enough to help consumers purchase a half-million more new cars, they added.