Cash for Clunkers bill in Senate's hands

Obama administration is hopeful the Senate will pass a Cash for Clunkers bill and authorize additional funding. But the fate of the popular trade-in program remains uncertain.

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By Peter Valdes-Dapena, senior writer

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NEW YORK ( -- The popular Cash for Clunkers program faces extinction unless the Senate passes a bill approving additional funding.

The Obama administration kept up the pressure Monday for the Senate to extend the program, which blew through its $1 billion in initial funding.

Two key senators who opposed more money for the program announced late Monday that they have changed their minds and will support a $2 billion funding extension.

Sen. Dianne Feinstein, D-Calif., and Sen. Susan Collins, R-Maine, have always backed the Cash for Clunkers program, but they wanted its extension to require a higher gas mileage standard for new cars that qualify for rebates. But they agreed to support more funding after an analysis by the administration found that in the initial days of program, consumers purchased cars with better fuel economy than required under the law.

Support from Collins and Feinstein is a help to Democratic leaders who are struggling to gather 60 votes to pass a bill by week's end.

"The Congress appropriated [and] the president signed $1 billion," said White House spokesman Robert Gibbs. "We think another $2 billion can take the program through September and that it's a good thing."

Gibbs said the program will likely be shuttered this week if the Senate fails to act.

On Friday, The House of Representatives passed a bill authorizing an additional $2 billion for the program after it apparently burned through its original $1 billion budget in the week since its official July 24 start date.

Transportation Secretary Ray LaHood said Sunday that the administration anticipates Senate members to follow the House.

On Monday, the Clunkers cause got a boost when most major automakers reported better-than-expected sales in July because of a boost in demand sparked by the trade-in program.

Still, the program's uncertain future left dealers uncertain how to proceed last weekend.

Despite the administration's promises that any Clunker deals written over the weekend would be honored, the National Automobile Dealers Association advised its members to play it safe and not close any more deals until the program's fate was settled.

"Regarding auto sales this weekend, one possible alternative is for dealers to take deposits in lieu of consummated sales with an eye toward legislative success next week," NADA spokesman Charles Cyrill wrote in an e-mail.

"We could have a legislative conclusion very quickly with the promise of more money for the program," Cyrill said later by telephone. Until that's settled, he said, the dealers' organization is recommending that dealers proceed with caution.

Under the plan as enacted, vehicles purchased after July 1 are eligible for refund vouchers worth $3,500 to $4,500 on traded-in gas guzzlers. The trade-in vehicle has to get a combined city and highway fuel economy rating of 18 miles per gallon or less.

The program's rules had required dealers to render traded-in vehicles permanently inoperable before applying for their rebates, but the Department of Transportation has amended that rule so that dealers now have the option of waiting until they receive the rebate before disabling the vehicle.

-- CNN Congressional Producer Ted Barrett contributed to this report To top of page

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-- Reuters contributed to this story.