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Obama, Congress, wrangle over Cash for Clunkers program

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Fort Worth Star-Telegram, Anna Tinsley, August 4, 2009 | comments
Despite the popularity of the “cash for clunkers” program, several North Texas congressional members say they can’t get on board with the program they believe is just another example of excessive government spending.

As the Senate is poised to vote this week on whether to join the House in adding another $2 billion in funding to the program, one Texas senator said he doesn’t plan to support adding any more money to the program.

“What I’m most concerned about is the reckless spending that’s going on here in Washington these days,” said Sen. John Cornyn, a Republican. “And it’s not just spending – it’s spending borrowed money. It never seems to end. I certainly would not support extension of any program that would make matters worse, and this would.”

The program began last week, and was expected to last until November until it hit a speed bump after a few days, when officials said they believed the $1 billion allocated for the program was close to being spent. Robert Gibbs, President Obama’s press secretary, said late Monday that the program will not likely make it to the weekend without the additional funding.

With the extra money, the program could last through September, he said.

The goal of the program is to stimulate the economy – and put more fuel-efficient vehicles on the road. Car buyers can get either $3,500 or $4,500 for trading in older vehicles for newer models with better mileage records.

President Obama is now asking Congress to allocate another $2 billion to keep the program going, and has invited all Senate Democrats and two Senate independents to lunch at the White House Tuesday to pitch his case.

Some senators want to require better fuel efficiency, and more emission reductions, before they agree to put more money in the pot. Some may never support the program, saying it adds up to another bailout for the auto industry.

Either way, some observers say the program will likely end if the Senate doesn’t authorize additional funds by the end of the week when it heads out for its August recess.

Texas’ senior senator, Kay Bailey Hutchison, has not weighed in on the issue and her office did not respond to a call and email from the Star-Telegram on Monday.

The New Car Dealers Association of Tarrant County is pushing Cornyn and Hutchison to back the measure. “We’ve made our views clear to them,” said Lee Chapman, president of the group.

Fort Worth area dealers said they’re pleased with the sales generated by the program, but some questioned whether to extend it. Frequent rules changes and problems getting sales entered into the government’s computer system have dealers worried they might not get paid for all the deals they’ve made.

“I’ve got 50 deals done without a confirmed rebate,” said Will Churchill, whose Frank Kent Honda dealership has seen a surge of new business. “I’ve got $200,000 I’m waiting on from the government.”

Churchill’s staff has gotten their sales entered into the government computer system. But nearby Texas Motors Ford has been unable to get the documentation for any of its 30 “cash for clunkers” sales entered and confirmed.

“Is it a positive? Absolutely,” said Cliff Johnson, owner of the Ford dealership. “I’m scared to death they’ll cut it off before we get paid.”

Dealers said the program has stimulated buyer interest that had lagged for months, and they’ve been able to make numerous sales even when the deal did not qualify for the government rebate.

At Classic Chevrolet in Grapevine, an employee has been reassigned to work overnight to try and get sales logged into the government computers.

“I’m interested in seeing it extended,” said Hagen Durant, general manager. “There’s more inventory to move and there’s a lot more clunkers to get rid of.”

Last week, North Texas House members were mixed on whether to add the $2 billion to the program.

“This program is arguably the first that seems to be actually “stimulating” the economy, as demonstrated by the consumer demand,” said U.S. Rep. Joe Barton, R-Lewisville, who was among those supporting the measure. “It is helping save thousands of jobs at the GM plant in Arlington and the businesses that support it, and may also improve air quality by taking older cars off the road.”

Many House members disagreed, including U.S. Reps. Kay Granger, R-Fort Worth, and Michael Burgess, R-Lewisville.

“I’m concerned this is yet another rush to spend billions of taxpayer dollars without any oversight,” Granger said. “Congress hasn’t held one hearing and hasn’t received any real information from the agencies on how the current program is working...We need to take a step back before spending another $2 billion on the program.”

New statistics show many of the trade-ins have been gas guzzling SUVs, such as Ford Explorers. And drivers have been switching the larger vehicles out for smaller, more fuel efficient cars, both American and foreign made, including the Ford Focus and Honda Civic, reports show.

Burgess said this program is another example of government spending gone wild.

“While Americans all across the country are combing their budgets for additional savings, the federal government continues to spend taxpayer money with no end in sight,” Burgess said. “North Texans have asked me to do what I can to stop the endless spending, so I voted no for giving Cash for Clunkers another two billion dollars.” AUTO SALES STRONGER

Lured by the government’s cash-for-clunkers campaign, car and truck buyers started returning to showrooms last month.

•Overall, automakers are expected to turn in strong performances, most notably Hyundai, which may pass Chrysler and Nissan in sales for the first time in history. July sales, if converted to an annual rate, could top 10 million cars and trucks, the first month this year that sales rose above that depressed level.

•July sales of Ford, Lincoln, and Mercury light vehicles _ led by the Fusion and Escape SUV _ rose 1.6 percent from the same month last year. It was the first time this year Ford’s sales were higher than the same month in 2008.

•Chrysler said its sales fell 9.4 percent despite heavy incentives and cash-for-clunkers help.

•Subaru of America said its U.S. sales leaped 34 percent in July.

•George Pipas, Ford’s top sales analyst, said early indications show that July U.S. sales, when adjusted for seasonality and projected at an annual rate, could hit around 11.5 million vehicles. Without the clunkers program, he said, July sales probably would have been about the same as June, about 9.7 million.
– The Associated Press

HOW LONG WILL CLUNKERS LAST?

It’s unclear how long the “cash for clunkers” rebate program will last.

•The Obama administration said previously it would honor sales made through the weekend. But Monday, the administration said the program would probably end this week if no new money is apporpriated by Congress.

•With extra funding, the program could last into September, the administration said.

•Dealers could stop making deals if they don’t believe the government will honor the rebates.

•The government is willing to pay rebates of $3,500 or $4,500 toward the purchase of a new car or truck if it gets significantly better fuel economy than the vehicle being traded in. Program details and a listing of vehicles eligible to be traded in can be found at: http://www.cars.gov/


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