Senators see support for "clunker" extension

WASHINGTON (Reuters) - Prospects for U.S. Senate approval of a $2 billion extension of the "cash for clunkers" auto incentive brightened on Monday when two key lawmakers threw their support behind the initiative.

The White House stepped up pressure on wavering senators by warning that the successful sales stimulus, which some, including former Federal Reserve Chairman Alan Greenspan, say is boosting overall consumer confidence, would cease if members did not act swiftly.

"I think if it doesn't happen this week, it's unlikely that we'll make it to the weekend with a program that can continue," White House spokesman Robert Gibbs said.

Although some Republicans, including Senate Minority Leader Mitch McConnell, believe Democrats are being irresponsible by trying to rush billions more in taxpayer dollars out the door, the chances any opposition would prove lethal had been reduced.

Auto dealers, who operate in every state, employ thousands of people, and donate generously to Republicans and Democrats and their causes, flooded Senate offices with urgent calls and letters seeking support for the extension.

The White House invited Senate Democrats to lunch on Tuesday with President Barack Obama to discuss, among other things, strategy for clearing the measure that was drafted and approved by the House of Representatives last week.

Senators cannot amend the House plan without calling that chamber back in session.

Proponents breathed easier Monday night after Senators Dianne Feinstein, a Democrat, and Susan Collins, a Republican urged quick passage of the measure. They said the Obama administration had satisfactorily answered their questions about the success of the incentive with car buyers.

"The program appears to be running very well," Feinstein said at a news conference about the month-old "clunker" incentive that offers consumers up to $4,500 to trade in older cars for new, more fuel efficient vehicles.

Until Monday, Feinstein and Collins were seen by extension supporters as potentially dangerous obstacles over concerns the program was not yielding sufficient fuel efficiency improvements. But they were pleased with data showing new cars purchased with "clunker" vouchers got nearly 10 percent better fuel mileage compared to the vehicles traded-in.

Preliminary Transportation Department information showed that consumers in large numbers were trading in pickups and sport utilities and driving off dealer lots in passenger cars, which as a class are more efficient.

U.S. and overseas automakers have basically split the business, which follows recent business trends in an industry wracked by a horrendous downturn in sales, bankruptcies, and contraction as recession worsened this year.

Regulators told Collins and Feinstein that 120,000 vehicles had been sold. Industry and government estimates continued to show the final tally would likely double that figure.

Under the program, older vehicles qualify for the clunkers program if they get 18 miles or less to the gallon and are less than 25 years old. For cars, the new vehicle has to have a combined fuel economy of at least 22 miles per gallon. Details on the program are available at www.cars.gov.

Collins said there was interest within the Republican leadership to proceed with the extension, while Feinstein said she believed there were the necessary 60 votes to overcome any opposition in the Democratic-led Senate.

Sources representing more senior Republican and Democratic officials, however, were more cautious as they cited numerous "moving parts." They said the timeframe remained challenging with senators planning to leave town for August on Friday.

The earliest members could take up the measure is late Tuesday but lining up votes and negotiating possible obstacles could muddle that schedule. The Senate is debating another bill and still plans to consider the nomination of Supreme Court nominee, federal appeals judge Sonia Sotomayor.

"There are procedural hurdles. There are people who do not want it to continue," Feinstein said of the potential still for Republican opposition to surface.

Earlier on Monday, the administration reported sales of 80,500 vehicles. The administration had not confirmed the total sales reported by Feinstein and Collins.

That "clunkers" data showed General Motors Corp, Chrysler Group, and Ford Motor Co running about even with recent marketshare totals by claiming nearly half the sales. The best-selling vehicle was the Ford Focus.

Ford, the only Detroit manufacturer not to operate with the help of a federal bailout and the only one of the three not to seek bankruptcy, reported on Monday that "clunker" incentives contributed to its first year-over-year monthly sales increase since November 2007. Ford's shares rose 4 percent.

GM reported a 54 percent increase in small-car sales and 78 percent of Toyota Motor Corp "clunker" sales included the popular Prius gas-electric hybrid, Camry sedan and Tacoma pickup. Most of the Volkswagens sold were clean diesel Jetta TDIs, figures released by manufacturers showed.

The program was established in part to help GM and Chrysler get on their feet after emerging from bankruptcy.

(Additional reporting by David Bailey in Detroit, Tom Ferraro, Rick Cowan and Jeff Mason in Washington)

(Reporting by John Crawley; editing by Bernard Orr and Carol Bishopric)