“Cash-For-Clunkers” Success Saves Auto Industry While Republicans Take Aim

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New York Daily News

CBS News

The Obama administration’s much-maligned “cash-for-clunkers” trade-in system has made an immediate and indisputable impact on the struggling U.S. auto industry, with consumers flocking to dealerships in numbers not seen in years and auto companies posting strong sales they directly attribute to the government program.

Ford announced on Monday that their July U.S. auto sales were up a strong 2.3% over results from one year ago, a result that company executives linked to “cash-for-clunkers.”

The government’s “cash for clunkers” program gave automakers a desperately needed sales boost in July, though their relief could be short-lived if the Senate does not vote to extend the trade-in program after it unexpectedly ran out of money.

The Ford Motor Company said Monday that its United States sales rose 2.3 percent last month, marking the first year-over-year increase for any of the six largest carmakers since last August. Ford had not posted a monthly sales increase in nearly two years.

Ford, which heavily promoted the government-sponsored rebate program at its dealerships, in television ads and on its Web site, sold 18 percent more cars and crossover vehicles than it did in July 2008, though sales of its trucks and sport utility vehicles fell 18 percent. The company did not say how many of its sales were made to people who turned in a vehicle to be scrapped under the program.

“We had another strong month in progress before the ‘cash for clunkers’ program started,” Ken Czubay, Ford’s vice president for marketing, sales and service in the United States, said in a statement. “Our products, our dealers and our advance preparation enabled us to leverage the program and drive traffic and sales to another level. In addition, we achieved a sales increase even though we decreased incentive spending in an increasingly competitive environment.”

The raw data on the program’s success comes as Republicans and moderate Democrats in the Senate are poised to kill it after the original $1 billion allocated for the initiative was almost completely depleted due to unprecedented demand. The House has already passed a measure injecting $2 billion more into the “clunkers” program.

The Senate may either reject a vote or refuse to take up the program before the August recess. The White House hit back on Monday, with Press Secretary Robert Gibbs pressing the Senate to act on “clunkers.”

 ”If the Senate doesn’t act…by this Friday…then, I think, obviously, I would not give people the same assurances of going into a dealership over the weekend.”

Gibbs also noted that the program would be a key topic of discussion when President Obama meets with all 60 Democratic senators on Tuesday.

Republicans have decided to ignore the success of “cash-for-clunkers” and attack the program and the president’s appeal for more funds as another government intrusion into private business and a waste of money for what they call a “failure.”

Sen. Jim DeMint built upon his well-known “Waterloo” rhetoric on health care by describing “clunkers” as “stupidity coming out of Washington” and argued that the administration needs to “slow…down” the auto recovery, while conservative commentator Bill Kristol slammed those buying cars as a “bunch of upper-middle-class people” who don’t deserve “to get 4,500 bucks.”

Senator Jim DeMint, Republican of South Carolina, said the “cash for clunkers” program was an example of the “stupidity coming out of Washington right now.”

“The federal government went bankrupt in one week in the used-car business, and now they want to run our health care system,” Mr. DeMint said in an interview on “Fox News Sunday.” “This is crazy to try to rush this thing through again while they’re trying to rush through health care, and they want to get on to cap-and-trade electricity tax. We’ve got to slow this thing down.”

Speaking on “Fox News Sunday,” William Kristol, the conservative editor of The Weekly Standard, said the rebates were going to middle-class people who would have eventually bought a new car anyhow.

Instead of helping the legions of unemployed, the money is going to a “bunch of upper-middle-class people who have some cars sitting around from 12 years ago,” Mr. Kristol said. “Now they’re just accelerating their purchase to get 4,500 bucks.”

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