"Cash for Clunkers" Auto Dealer Stimulus Bill May Face Senate Obstacle

WASHINGTON, June 16, 2009; John Crawley and Jaeremy Pelofsky writing for Reuters reported that auto industry supporters in Congress are bracing for a last-minute challenge this week to a legislative proposal that is designed to spur U.S. vehicle sales.

Republican Senator Judd Gregg of New Hampshire said he hopes to raise a procedural motion on the Senate floor to strip the provision from a bill that continues funding for the Iraq and Afghanistan wars.

"As the nation's debt continues to climb to unsustainable levels, it is troubling that Congress is looking for even more fiscally reckless ways to subsidize the auto industry," Gregg said in a statement.

The so-called "cash for clunkers" plan approved in House/Senate negotiations on the larger spending bill would offer consumers up to $1 billion in vouchers toward the purchase of fuel efficient vehicles when they trade in older, less efficient models.

Supporters hope the plan that would run through Sept. 30 will generate up to 250,000 new car sales, boosting a severely depressed industry that has seen two U.S. manufacturers -- General Motors Corp and Chrysler -- seek bankruptcy protection since April.

Gregg argues the proposal is not only fiscally irresponsible but procedurally flawed, too, because it was not included in full House or Senate votes on the wartime appropriations bill.

Supporters in the Senate say the challenge could come as early as Wednesday.

Senator Debbie Stabenow of Michigan, a lead advocate of the auto proposal, said the measure was of prime importance to automakers and related businesses.

"This is our one chance opportunity to help dealers," Stabenow said.

The House of Representatives approved a separate "clunkers" bill while the Senate never took it up. The measure was inserted into the spending package during negotiations last week to reconcile other differences in the spending legislation.

The House could vote later on Tuesday on the appropriations bill.

Editing for Reuters by Bernard Orr