Turnaround?

Automobile sales have suddenly been spiking upward, thanks to the cash-for-clunkers program set up by the federal government. Sales for July were up to 11.2 million vehicles, and General Motors and Chrysler checked their declines in year-over-years sales drops (in this case, July 2009 compared to July 2008), coming it at 9.4 percent less and 19 percent less, respectively. Ford, meanwhile, sold 2.4 percent more cars last month in than July 2008, and its sales have steadily risen thanks to the goodwill it's earned from not taking federal bailout money.

So why is the Car Allowance Rebate System, also known as the cash-for-clunkers program, still in trouble?

With the popular program running out of money, the House of Representatives passed a $2 billion infusion for the program, but the Senate is slower to act. Republicans have expressed skepticism over subsidizing car sales with $4500 credits effectively giving consumers free taxpayer money, while some Democrats have wondered allowed if the environmental gains have been substantial. True, many small cars have been bought under the program, and SUVs account for many of the scrapped vehicles. Indeed, the compact Ford Focus is the bestselling car under the program. But there have been anecdotal stories of buyers trading in their old pickup trucks for new pickup trucks of the same size and/or class, because the fuel economy ratings of the newer vehicles are marginally better.

As noted earlier, Senator Dianne Feinstein (D-CA) thought the fuel economy rules in the program didn't go far enough, and Senator Susan Collins (R-ME) agreed with her. Both senators have since announced that they will support the extension in the Senate, regardless of earlier concerns, because they believe it's done more good than harm.

"The good news is apparently people are buying more cost efficient vehicles. The best solution is to continue and extend the program as it is," Feinstein said.

But as long as chuckleheads like Senator Jim DeMint (R-SC) stand in the way, complaining that the government is getting in the used car business (well, the government lies and cheats, so it would have the experience for selling used cars, even though they're only buying them and having them taken out of service in this program), Senate action isn't a fait accompli just yet.