Cash for Clunkers Boosts Foreign Car Sales

ABC's Jonathan Karl reports from Washington:

The Cash for Clunkers program has been widely credited with boosting auto sales in July, but most of the sales boost is benefitting foreign car companies.

In fact, four of the top cars bought through the program as of today have been Japanese cars. Here’s the top the five, according to the Department of Transportation:

1. Ford Focus 2. Toyota Corolla 3. Honda Civic 4. Toyota Prius 5. Toyota Camry

The Ford Escape is number six, followed by Hyundai Elantra, Dodge Caliber and the Honda Fit. The only car from General Motors to make the Top 10 list is the Chevrolet Cobalt, coming in at number 10.

The Senate will likely vote to pump another $2 billion into the Cash for Clunkers program before money runs out on Friday, but it is taking a big push from President Obama to get it done.

“We are going to pass cash for clunkers,” declared Senate Majority Leader Harry Reid (D-NV) said after leaving today’s White House meeting with President Obama.

But Senator Reid’s newfound confidence that the program will be extended comes only after a big push from the White House.

The program is popular, has been credited with boosting auto sales and passed overwhelming the House, but there hasn’t been much enthusiasm for it in the Senate.

For one, this was never a Senate program. The first $1 billion for the Cash for Clunkers was added by the House of Representatives to the emergency war spending bill in June. It never actually passed as a stand-alone measure in the Senate. The Senate went along with it but never had a separate vote.

Senator Diane Feinstein is now willing to vote for an extension of the program, but like many other Democratic Senators she thinks the program’s fuel efficiency standards are way too low – you can $3500 credit for buying a car that gets a mere 4 miles per gallon better mileage than your clunker.

But Feinstein dropped her objection to continuing the program only after sales figures showed that the first 250,000 who have taken advantage of it have traded clunkers for cars that get, on average, nine miles per gallon better mileage.

Not all Democrats are on board yet, however. Senator Clair McCaskill (D-MO) told ABC News that she still has a lot of questions, including: How will the program end? How much of the money is going to buy foreign cars? And more fundamentally, why is the government subsidizing the purchase of cars?

“Why not $4500 for old refrigerators why not $4500 dollars in other small businesses around my state that are struggling? So I just think that we have to be careful that we don’t go too far with this program that we don’t spend too much money on this program,” McCaskill told ABC News.

The majority of Senate Republicans oppose the program, but while they will vote against it, Republican leaders say they will not attempt to use procedural maneuvers to block the bill.

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