U.S. President Barack Obama praised members of Congress from both parties for rushing to pump new money into a popular cash-purchase program that is running out of money.
Obama spoke Friday as the House passed the measure 316 to 109. It would pour $2 billion US from the economic stimulus program into the "cash-for-clunkers" initiative to give consumers more time to take advantage of trade-in rebates for older cars.
The president said initially there had been skeptics about the car-purchase program, but that now "we're already seeing a dramatic increase in showroom traffic" across the country. He said the program "gives consumers a break" and helps to reduce pollution.
A Senate debate and vote on the issue is expected next week.
The White House said Thursday it was reviewing what has turned out to be a wildly popular cash-for-clunkers program amid concerns the $1 billion budget for rebates for new auto purchases may have been exhausted in only a week.
Transportation Department officials called lawmakers' offices earlier Thursday to alert them of plans to suspend the program as early as Friday. But a White House official said later the program had not been suspended and officials there were assessing their options.
The CARS program offers owners of old cars and trucks $3,500 or $4,500 toward a new, more fuel-efficient vehicle.
Congress last month approved the program to boost auto sales and remove some inefficient cars and trucks from the roads. The program kicked off last Friday and was heavily publicized by car companies and auto dealers.
Through late Wednesday, 22,782 vehicles had been purchased through the program and nearly $96 million had been spent. But dealers raised concerns about large backlogs in the processing of the deals in the government system, prompting the suspension.
A survey of 2,000 dealers by the National Automobile Dealers Association found about 25,000 deals had not yet been approved by NHTSA, or nearly 13 trades per store. It raised concerns that with about 23,000 dealers taking part in the program, auto dealers may already have surpassed the 250,000 vehicle sales funded by the $1-billion program.
"There's a significant backlog of 'cash for clunkers' deals that make us question how much funding is still available in the program," said Bailey Wood, a spokesman for the dealers association.
Alan Helfman, general manager of River Oaks Chrysler Jeep in Houston, said he was worried that the government wouldn't pay for some of the clunker deals his dealership has signed because they aren't far enough along in the process.
His dealership has done paperwork on about 20 sales under the clunker program, but in some cases the titles haven't been obtained yet or the vehicles aren't yet on his lot.
"There's no doubt I'm going to get hammered on a deal or two," Helfman said.
The clunkers program was set up to boost U.S. auto sales and help struggling automakers through the worst sales slump in more than 25 years. Sales for the first half of the year were down 35 per cent from the same period in 2008, and analysts are predicting only a modest recovery during the second half of the year.
So far this year, sales are running under an annual rate of 10 million light vehicles, but as recently as 2007, automakers sold more than 16 million cars and light trucks in the U.S.
Even before the suspension, some in Congress were seeking more money for the auto sales stimulus. Michigan Rep. Candice Miller wrote in a letter to House leaders on Wednesday requesting additional funding for the program.
"This is simply the most stimulative $1 billion the federal government has spent during the entire economic downturn," Miller said Thursday. "The federal government must come up with more money, immediately, to keep this program going."
Michigan lawmakers planned to meet on Friday to discuss the program.
Brendan Daly, a spokesman for House Speaker Nancy Pelosi said they would work with "the congressional sponsors and the administration to quickly review the results of the initiative."
General Motors Co. spokesman Greg Martin said Thursday the automaker hopes "there's a will and way to keep the CARS program going a little bit longer."