Congress approved a cash for clunkers program on June 18th to provide government incentives of $3,500 to $4,500 to motorists who trade in their old gas-guzzlers for more fuel efficient vehicles after Senate Democrats barely defeated a Republican effort to kill the plan.
Some state senators said the program would help hard-pressed car dealers and automakers by bringing new buyers into showrooms, and they got help from President Obama and Vice President Joe Biden, who made calls to wavering Democrats urging them to keep the plan alive.
Opponents of the proposal said it would increase the federal debt without doing much to get expensive-to-operate vehicles off the roads.
Supporters of the program overcame a procedural obstacle by the plan's leading opponent, Sen. Judd Gregg, on a 60-36 vote, winning the minimum number of votes needed to keep the program in a $106 billion war-spending plan that the Senate passed later Thursday.
The House approved the cash for clunkers bill last week on a vote of 298-119 and Senate Democrats attached it to the war-spending bill. The total bill now goes to the White House for Obama's signature.
Supporters said the program, which would be implemented by the Transportation Department, was expected to be implemented by early August.
Under the proposal, car owners could get a voucher worth $3,500 if they traded in a vehicle getting 18 miles per gallon or less for one getting at least 22 mpg. The value of the voucher would grow to $4,500 if the mileage of the new car was 10 mpg higher than the old vehicle. The miles per gallon figures are listed on the car window's sticker.
Owners of sport utility vehicles (suv's), pickup trucks or minivans that get 18 mpg or less could receive a voucher for $3,500 if their new truck or SUV got at least 2 mpg higher than their old vehicle. The voucher would increase to $4,500 if the mileage of the new truck or SUV was at least 5 mpg higher than the older vehicle.
Dealers taking part in the program would receive an electronic voucher from the government for the trade-in to apply to the purchase or lease of a qualifying vehicle. The bill directs dealers to ensure that the older vehicles are crushed or shredded to get the clunkers off the road.
The program was intended to help replace older vehicles - built in 1984 or later - and would not make financial sense for consumers owning an older car with a trade-in value greater than $3,500 or $4,500.
The U.S. industry is expected to generate about 9.5 million vehicles sales in 2009, compared with more than 13 million in 2008 and more than 16 million in 2007.