Senators to put brakes on ‘cash for clunkers’

[cletus8269]

The Obama administration’s oversubscribed “cash for clunkers” scheme looks likely to founder in the Senate this week as bipartisan opposition mounted on Monday to the $2bn extension passed last week in the House of Representatives.

Republican senators described the scheme, in which car users can take up to $4,500 (€3,170, £2,710) in government vouchers to trade in their vehicles for more fuel efficient ones, as a “boondoggle” – or a waste of time and money – and all but threatened to filibuster the planned extension. This would almost certainly kill prospects of renewing the scheme before the Senate returns from recess in September.

Republicans also pointed out that the administration had originally estimated the first $1bn in funding would last until November. Instead it is expected to run out in the next few days. “When the administration comes bearing estimates, it’s not a bad idea to look for a second opinion,” said Mitch McConnell, the Senate minority leader. “All the more so if they say they’re in a hurry.”

Prospects for overcoming a Republican filibuster were also dealt a blow on Monday with objections from a number of leading Democrats. Dianne Feinstein, the senator from California, and Chuck Schumer, the New York senator, both want to raise the fuel efficiency standards of the subsidised vehicles, 250,000 of which have now been funded.

Meanwhile, Jeff Bingaman, the senator from New Mexico, objected to the diversion of funds from the $6bn allocated to the Department of Energy under the $787bn stimulus programme in February. It is unclear whether the administration could find other sources of cash to extend “cash for clunkers”, or whether it could move ahead without congressional approval.

Hopes for an extension were complicated by the limited time available before the Senate goes into recess at the end of the week. It is also set to vote on Sonia Sotomayor, Barack Obama’s nominee for the Supreme Court, on Tuesday or Wednesday. And Harry Reid, the Senate majority leader, who faces re-election next year, plans a vote on a tourism promotion bill for his home state of Nevada this week.

Furthermore, if the $2bn extension did pass this week but contained even the slightest alteration to the House bill, the two versions would have to be reconciled and the lower chamber is already in summer recess. “My guess is that this is highly unlikely to move forward before the end of the week,” said a spokesman for a senior Democratic senator.

However, most analysts believe the scheme’s longer-term prospects look much brighter even if it is forced into mothballs for a few weeks.

Since both foreign and US cars are eligible, it has political support from the south, where foreign carmakers are based, and from the rustbelt, where US car manufacturing is based.

In addition, it is evidently popular with the voters. “Most politicians wouldn’t want to stand between a speeding car and free cash,” says Kevin Book, an energy analyst in Washington. “For politicians it is ideal: an industrial policy with quick payout to the voters.”

Copyright The Financial Times Limited 2009

http://www.ft.com/cms/s/0/bede213a-8065-11...144feabdc0.html

[cletus8269]

Since both foreign and US cars are eligible, it has political support from the south, where foreign carmakers are based, and from the rustbelt, where US car manufacturing is based.

um.... wouldnt "the north" have sufficed?

[loki]

Since both foreign and US cars are eligible, it has political support from the south, where foreign carmakers are based, and from the rustbelt, where US car manufacturing is based.

um.... wouldnt "the north" have sufficed?

nope...cause, you know, they all don't produce things/cars... /s .....?

i think other than saying this program doesn't help the car makers recover any faster, cause when this program dies, sales will drop off. actually, prolly this month or next will have a steep decline, past where it was before C2C came into effect.

i'm going to bet that a lot of these cars are going to be repo'ed... , not all, not the majority, but alot.

[Croc]

Since both foreign and US cars are eligible, it has political support from the south, where foreign carmakers are based, and from the rustbelt, where US car manufacturing is based.

um.... wouldnt "the north" have sufficed?

No, because auto manufacturing is not based in most of "the north"--only in the portion comprising the rustbelt.

[Camino LS6]

"Rustbelt" is such a perjorative epithet.

[toesuf94]

I hope that this program is dead...just like the brains that dreampt it up...good riddance to horrible policy!

I think the administration has dealt itself a huge political blow on this one in reading the comments on Youtube and elsewhere when videos are shown of the destroying of working cars. People are getting VERY political about this stupid prodgram. Could this mean Americans are finally waking up to wasteful government spending on the backs of the taxpayers??? Let's hope so.

[Croc]

"Rustbelt" is such a perjorative epithet.

No, not really. It came about because of the IRON production/manufacturing of the region.

[Robert Hall]

No, not really. It came about because of the IRON production/manufacturing of the region.

Really? I always thought it was because they use a lot of salt on the roads and thus rusty cars used to be common there (having grown up there, that's what I understood it to mean), plus all the rusty, decaying closed factories, steel mills, etc.

Rob

[Z-06]

Rust Belt or Rustbelt,economic region in the NE quadrant of the United States, focused on the Midwestern (see Midwest) states of Illinois, Indiana, Michigan, and Ohio, as well as Pennsylvania. The term gained wide use in the 1970s as the formerly dominant industrial region became noted for the abandonment of factories, unemployment, outmigration, the loss of electoral votes, and overall decline. Since the 1960s, manufacturing cities throughout the Great Lakes region and in the Northeast have suffered a decline in population and economic strength as manufacturers relocated, primarily to the Sun Belt, overseas, or more recently, to Mexico. Meanwhile, the nation as a whole has shifted toward a service economy. Detroit, although still one of the world's largest manufacturing centers, has been especially hard hit and unable to reduce its dependence on the manufacturing sector. Suburban flight induced by the decline of the central city has been dramatic in large cities such as St. Louis and Cleveland, as well as smaller cities like Gary, Ind., and Akron, Ohio. By the 1980s, the economy of some Rust Belt cities had noticeably improved after the introduction or expansion of non-manufacturing industries. Pittsburgh, initially devastated by cutbacks in its steel industry as early as the late 1950s, has since emphasized its role as a center for research and development and finance.