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Senate readies fill-up for 'cash for clunkers'

WASHINGTON — Acting with unusual haste, the Senate readied a $2 billion fill-up Thursday for "cash for clunkers," an economy-boosting program that sent car buyers storming into formerly deserted auto showrooms at a pace that quickly exhausted its $1 billion funding.

The House approved the $2 billion replenishment last week for the program, which gives consumers up to $4,500 in federal subsidies for trading in their cars for new, more energy-efficient models. A final Senate vote would send the bill to the White House, where President Barack Obama's signature was assured.

Officials said the additional money would help consumers purchase 500,000 more new-model cars.

The Senate's action capped an unusually swift response by lawmakers, who were informed scarcely a week ago that the program was quickly running short of money.

In advance of a final vote, the bill's supporters worked to defeat numerous proposed modifications to the program. "We all know that if we change the bill, it will die," Senate Majority Leader Harry Reid, D-Nev., told reporters a few hours before debate began. "We are going to do everything we can to stop that."

Among the proposed changes was one to place the car-buying subsidies off-limits to the wealthy.

As the program stands, Microsoft founder Bill Gates can get $4,500 to buy a new car, said Sen. Tom Harkin, D-Iowa. "You have to ask, is this a wise way to spend limited amounts of money?"

Republicans readied amendments to terminate the Troubled Assets Relief Program that has spent billions bailing out banks and other financial institutions, and to require the government to sell its stake in General Motors Co. and Chrysler Group LLC.

The program began 10 days ago with $1 billion, designed to help automobile makers and consumers while contributing to a cleaner environment. The government said Wednesday that more than $775 million of the original funds has been spent, accounting for the sale of nearly 185,000 new vehicles. Administration officials estimate the extra funding will last into Labor Day.

Under the program, passenger car owners are eligible for a voucher worth $3,500 if they trade in a vehicle getting 18 miles per gallon or less for a new car getting at least 22 mpg. Vouchers of $4,500 are available for owners who trade in a passenger car getting 18 mpg or less for a model that gets at least 28 mpg.

There are similar guidelines for SUVs and pickup trucks.

Dealers are barred from reselling the old models, and are charged with assuring their destruction.

Jeremy Anwyl, CEO of the auto Web site, said the unintended result is that vehicle prices are climbing.

"What we've created now is a shortage for key models," he said. "Prices are going up dramatically."

Hyundai Motor Co. has added a day of production at its Montgomery, Ala., factory, while Ford Motor Co. and GM are considering following suit.

Tom Stephens, vice chairman of product development at GM, said in an interview that the company has had spot shortages of compact and midsize cars, which have been popular with consumers jettisoning their clunkers. The company also reported an increase in sales of the Chevrolet HHR small sport utility.

"Consumer confidence is really what you need here," Stephens said. "It's hard for them if they don't know if they have a job or a for-sure paycheck to go out and make a major purchase, so I think this is kind of jump-starting some things."

The longer-term impact is uncertain, but so far, GM's share of cars sold under the program is largest, accounting for 18.7 percent of new sales. Toyota Motor Corp. followed with 17.9 percent, while Ford had 16 percent. Detroit automakers represented 45.3 percent of the total sales while Toyota, Honda Motor Co. and Nissan Motor Co., all Japanese firms, totaled 36.5 percent.

Toyota also has the best-selling new model for traders of clunkers, the Corolla. The Ford Focus, Honda Civic, Toyota Prius and the Toyota Camry are also favorites. There is one SUV on the list, the Ford Escape, which also comes in a hybrid model that can get up to 32 mpg. Six of the top-10 selling vehicles are built by foreign manufacturers, but most are built in North America.

Associated Press writers Ken Thomas in Washington, Tom Krisher in Traverse City, Mich., and Dan Strumpf in New York contributed to this report.