Senator Seeks to Strip Cash For Clunkers From War Bill

WASHINGTON, June 17, 2009; John Crawley writing for Reuters reported that U.S. Senator Judd Gregg said on Wednesday he would try to strip a $1 billion proposal designed to spur auto sales from a war spending bill, an initiative carmakers say is crucial for industry recovery.

Gregg said the plan, offering up to $4,500 to consumers who trade in older less-efficient vehicles when purchasing new models that get better mileage, may be a good idea. But he said wrapping it into the military appropriations measure is inappropriate.

The Republican from New Hampshire also said the so-called "cash for clunkers" program, while good for industry, makes poor fiscal sense because there are no budget cuts to offset the cost.

"It passes on new debt. Why would we do that?" Gregg asked in a floor speech.

Gregg said he would offer a challenge "at the appropriate time." The Senate may consider final passage of the legislation as early as Thursday.

The House of Representatives approved the $106 billion war spending package on Tuesday night, including the auto measure.

Automakers, the United Auto Workers union, car dealers and other industry groups have lobbied hard for the measure.

Their chief supporter in the Senate, Michigan Democrat Debbie Stabenow, said passage now is crucial with industry sales off 40 percent this year.

"It will not help as a stimulus if it is done six months or a year from now," Stabenow said.

Editing for Reuters by Tim Dobbyn