UPDATE: On to the Senate for more clunker cash

Update: 2:09 p.m. Now that the U.S. House has passed a bill to add $2 billion to the cash-for-clunkers program, the action moves to the Senate on Monday.

The quick House action -- less than 24 hours after the first warnings the original $1 billion incentives pool was about to run dry -- and the 3 to 1 vote margin shows how much momentum the program had developed.

The rush of “clunker” showroom traffic has been the best boost in a year for most dealers. And dealers are rarely shy in telling their local politicians how they feel.

How will the bill do in the Senate? Well, if the average Congressional district has several dealerships, the average Senator has dozens or hundreds of dealers in his or her state.

UPDATE, 1:01 p.m.:Capital Hill is a beehive today as Congress scrambles to find additional funds to keep the unexpectedly popular cash-for-clunkers incentives from grinding to a halt.

After word Thursday that the $1 billion allocated for the program was running out, both White House and Congressional leaders started looking for fresh funds to keep it going.

Time is short. The House is due to adjourn this afternoon and the Senate next week.

This morning, House Appropriations Committee Chairman David Obey (D-Wis.) introduced a bill to add $2 billion. At the same time, the Michigan delegation met in the offices of Sen. Carl Levin (D-Mich.) to draft a similar bill that could be considered by the full House under a suspension of the rules, the Washington Post reported.

That would allow a quick vote and prevent amendments, but it would need a two-thirds majority to pass.

So far, most public comments by politicians support keeping cash-for-clunkers going. Opposition is muted.

UPDATE, 11:39 a.m.: Cash-for-clunkers deals written this weekend will be honored, msnbc’s First Read quoted White House spokesman Robert Gibbs as saying this morning.

So dealers in Detroit and other metro markets that are closed Saturday and Sunday are screwed.

While the White House and Congress scramble to catch up on how to fund the unexpected popularity of the federal incentive, dealers and customers have to wonder if and when the deals will disappear. Each deal becomes a $4,500 bet.

“Administration and Congressional officials are working to keep it up and running,” says Gibbs.

But dealers not open Saturday and Sunday only have until close of business today to take advantage of Gibb’s pledge. That may not be easy in towns like Detroit, where the morning headline in the Detroit Free Press reads “Clunker deals frozen.”

Cash-for-clunkers program defines how not to do it

The federal cash-for-guzzler fiasco is the very definition of how not to run an incentive program.

Everything that could possibly go wrong has. It took too long to start. The rules are too complicated. The $1 billion budget is too small. The rules changed at the last minute. Six days into a four-month program, the cash ran out. Or, wait, maybe not.

Amidst all the confusion, the only certainty is that the program worked. Despite flaws, it drove consumers to dealerships like nothing else has in the past 12 months. They took their gas guzzlers down to the local car shop, slammed the title on the counter and demanded to drive away in something new.

Now that sudden positive momentum is threatened.

Government programs paying consumers to trade-in old cars for new ones can work. European governments have done it for decades.

Here’s what they have learned (well, most of them).

Do it quick. Once you start to talk about it, many prospective customers stop buying new vehicles until they learn what the deal will be. The U.S. government took half a year.

Keep it simple. Trading in anything older than 10 years for any new vehicle is simple. Trading in something that gets less than some arbitrary fuel economy level (theoretical, not actual) for vehicles that get more than another arbitrary number is not.

Stimulate the economy, not set social policy. The idea is to jump-start moribund sales. Despite the cash-for-clunker name, the U.S. program specifies trading in gas guzzlers.

Don’t change the rules. Don’t readjust fuel-economy numbers days before the program starts, for example. And if it really works, don’t talk about pulling the plug six days into a four-month program because funds are running out.

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