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House Approves More Clunker Cash

The U.S. House approved an emergency $2-billion infusion for the cash-for-clunkers program this afternoon, with a plethora of lawmakers from around the country calling it a runaway success that should not be ended.

But the head of the National Automobile Dealers Association warned dealers today that until the money was guaranteed, they could be on the hook for any cash-for-clunkers trades despite assurances from the Obama administration that deals through today will be honored.

With the House set to adjourn today for a monthlong recess, House Democratic leaders worked through the night to craft a bill carving $2 billion from an energy loan program that was part of the $787 billion economic stimulus plan passed earlier this year. The original cash-for-clunkers bill had set aside $4 billion for the plan, but was pared back to $1 billion in a compromise in the Senate, with $50 million carved out for running the program.

"The rush to use this program shows its need," said Rep. Sander Levin, D-Royal Oak. "What else do we need to see? This program is working."

The focus now turns to the Senate next week, where individual senators have more power to slow passage of any bill, especially with just one week left before it adjourns Friday. The administration was still struggling to determine how much of the $950 million the program began with was already committed to car buyers.

Sen. Carl Levin, D-Mich., said while the program offering vouchers of $3,500 or $4,500 on a new vehicle for junking a gas guzzler was open for business today and all valid deals would be honored, its future was still uncertain.

"People should go to their car dealers if they want to make this deal. We don't know how long it will last," Levin said after a meeting with lawmakers this morning.

White House spokesman Robert Gibbs told reporters the plan would continue for now as well, but declined to say how long it might last without additional money.

"If you are planning on going to buy a car this weekend and using this program, this program continues to run," Gibbs said. "And if you meet the requirements of the program, the certificate should be honored."

While the U.S. Department of Transportation had expected the plan to generate 250,000 new vehicle sales over three months, Levin said the administration had processed about 40,000 deals, while auto dealers estimated there are another 200,000 to be approved after its official launch Monday.

Many dealers had complained that the computer system for filing deals had been overwhelmed; federal officials told dealers the "vast majority" of applications were being rejected for incomplete or illegible paperwork. Since the law requires dealers to complete the trade and destroy the clunker's engine before filing with the government, tracking exactly how many deals are in progress may be impossible.

NADA Chairman John McEleney, an Iowa dealer, said the organization had been assured by the Obama administration that all transactions consummated through today will be honored.

"Nonetheless, until further definitive guidance on the availability of funding is provided by the administration, dealers who accept additional 'clunkers' deals may face a risk that they will not be reimbursed," McEleney said.

The stumble in the wildly popular offer left dealers and consumers confused, and created a unwelcome political distraction for the Obama administration as it was attempting to focus on moving health-care reform ahead.

The cash-for-clunkers plan passed the House in June by a vote of 298-119.

The Senate will remain in session through next week, but opponents of the move would have several ways to delay action that could keep it from passing. One key senator, Dianne Feinstein, D-Calif., had vowed to block any extra money for the program until it was altered to benefit more fuel-efficient models.

Michigan Sen. Debbie Stabenow said passing the bill through the Senate, "will be a challenge."

Lawmakers said the administration was struggling to count the number of deals that had been made under the program, to monitor the number of customers who take part, and to match that number to the money available.

The administration is "going to have to make a best estimate," Levin said. "There's lots of glitches in this system."

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