Cash for Clunkers program improves gas mileage

According to the August 3, 2009 article "Administration: 'Clunkers' improving gas mileage" by Associated Press writer Ken Thomas:

WASHINGTON – The Obama administration appealed to the Senate on Monday to bail out the cash for clunkers rebate program, arguing it has already made striking gains in fuel efficiency and is a "wildly popular" economic boost.
Transportation Secretary Ray LaHood ducked when asked if the program will be suspended if the Senate does not vote to replenish coffers before lawmakers go on vacation later this week. Instead, he said "I believe the Senate will pass it this week."
The administration said the average fuel economy of new vehicles purchased through the program is nearly 10 miles per gallon higher than for the vehicles traded in for scrap. LaHood said some 80 percent of the traded-in vehicles are pickups or SUVs, meaning many gas-guzzlers are being taken off the road, and the Ford Focus is a leading replacement vehicle.

"The program is working the way Congress intended it to work," he asserted on MSNBC. But it was not intended to run out of money nearly so quickly, nor create such confusion at dealerships.

The administration pressed hard for an additional $2 billion after serving notice over the weekend that the program could expire as early as this week unless the Senate acts, as the House did in voting overwhelmingly for the money Friday.
Senate Republicans appeared to be in no rush Monday. "We were told this program would last for several months," GOP leader Mitch McConnell of Kentucky said in remarks prepared for a Senate floor speech. "It ran out of money in a week, prompting the House to rush a $2 billion extension before anybody even had time to figure out what happened to the first billion."
McConnell said "it's not a bad idea to look for a second opinion. All the more so if they say they're in a hurry."

The administration collected information on 80,500 vehicle transactions logged into the government's operating system through Saturday afternoon. An official said the fuel efficiency improvements would save a typical customer $700 to $1,000 a year in fuel costs. The new vehicles were getting 25.4 miles per gallon on average, a 61 percent increase over the models traded in, said the official, speaking on condition on anonymity because the figures had not been released.

The data was aimed at appeasing lawmakers such as Sens. Dianne Feinstein, D-Calif., and Susan Collins, R-Maine, who have questioned whether the program's environmental benefits go far enough.

"We're encouraging senators to listen to their car dealers and the people they represent," LaHood said. "If they do that, it will pass the Senate."

The administration has been coy about just how long dealers would be reimbursed for rebates of up to $4,500 per vehicle, after saying Sunday that the program would have to be suspended if the Senate failed to act.

Fierce lobbying for the program came from other quarters: The National Automobile Dealers Association and the American International Automobile Dealers contacted thousands of dealerships, telling them to bombard the Senate with phone calls and e-mails.

"This is the one true stimulus that seems to be working out of all the things that have been tried in the last few months," said Cody Lusk, president of the international group.

LaHood had said earlier that if the $2 billion isn't approved, "we would have to suspend the program." At the same time, LaHood told C-SPAN's "Newsmakers" show Sunday that the administration would "continue the program until we see what the Senate does and I believe the Senate will pass this."

"Any deal that is made (Monday) or the next day and that is in the pipeline ... the dealer will be reimbursed and the car buyer will be reimbursed," the secretary declared.

The program provides consumers with $3,500 or $4,500 in incentives for trading in gas guzzlers for more fuel efficient vehicles. Automakers were reporting July's auto sales on Monday and analysts expected the car program to provide a boost in overall sales.

Only the Senate can help at this point; the House voted Friday for the money to be put into the popular program, and the House members have left on their summer recess. The Senate is scheduled to start its vacation by week's end.

Obama officials scrambled last week to add money to the Car Allowance Rebate System, which is designed to get old, polluting vehicles off the road and scrapped while helping car dealers emerge from the recession. The $1 billion has led to the sale of some 250,000 new vehicles.

The program helped lift Ford Motor Co. to its first monthly sales increase in two years, the company's top sales analyst said Sunday.

July sales results mark the first year-over-year gain for Ford since November 2007 and apparently the first uptick by any of the six biggest carmakers in a year, George Pipas said.

"We were having a good month — and Ford's been having some good months lately — but the program really put us over the top for sure," Pipas said.

The Senate narrowly approved the initial money in June. But some lawmakers who voted for the plan, including Feinstein and Collins, have said the additional dollars should push consumers to buy more fuel-efficient vehicles and allow people to buy fuel-efficient used vehicles. Sen. Jeff Bingaman, D-N.M., has said he was concerned with the way the House paid for the extension, shifting $2 billion from a renewable energy loan program.