WASHINGTON The Senate could vote as early as Tuesday on a proposal to spur auto sales by underwriting some of the cost to consumers of buying fuel-efficient cars.
A bipartisan plan authored by Senators Debbie Stabenow of Michigan and Sam Brownback of Kansas comes into focus a day after General Motors Corp followed Chrysler LLC into bankruptcy.
It also comes as automakers are reporting yet another month of recession-fueled steep sales declines.
Ford Motor Co said on Tuesday its domestic sales in May were off 24 percent.
The Senate proposal, known as "cash for clunkers," would provide up to $4,500 in vouchers to car buyers who trade in their older, less fuel efficient models for vehicles that get better gasoline mileage.
New cars must get at least 22 miles per gallon while sport utilities and pickups -- the biggest sellers for U.S. manufacturers -- must achieve at least 18 mpg. Vehicles over $45,000 are ineligible.
The program would be in place for a year and proponents hope it would facilitate about 1 million new car purchases.
A Reuters poll of analysts expect median sales to hit 9.4 million units on an annualized basis. That would be slightly higher than April but far below the 14.3 million unit rate a year earlier.
President Barack Obama encouraged Congress on Monday to approve a voucher program.
Leading auto manufacturers also support the plan, a similar version of which is working its way through the House of Representatives.
"Around the world, consumers are already benefiting from similar programs, and the resulting economic stimulus has been significant," said Dave McCurdy, president of the Alliance of Automobile Manufacturers, an industry trade group.
The Senate proposal could be attached as an amendment to legislation that would grant the Food and Drug Administration new power to regulate tobacco products, officials said.
(Reporting by John Crawley, editing by Gerald E. McCormick)