“If we don’t get the $2 billion from the Senate … we would have to suspend the program next week,” LaHood told C-SPAN’s “Newsmakers” show. He said the administration “will continue the program until we see what the Senate does and I believe the Senate will pass this.”

A number of Senate lawmakers are lining up to oppose the extra funding — some because of the cost, some because the funding steals from a renewable energy program, and some because they say the program’s current rules don’t go far enough to promote better fuel efficiency.

Yet LaHood’s warning that the funds could dry up by Monday — not to mention his insistence that any trades made early this week will be honored — puts these senators in a tough spot: If they deny the funds then the auto-dealers are stuck with the bill, and if they change the terms then they’ll need another vote from the House, which is out of town on a five-week vacation.

Indeed, they may have no choice but to pass the extension, with plenty of grumbling.

The tremendous number of sales in the first week of this program demonstrates that the CARS Act has succeeded in increasing new vehicle sales, but Congress needs this data in order to determine if the fleet modernization program delivered significant fuel economy gains and oil savings.

They have an ulterior motive. Even as Detroit’s defenders successfully pushed through legislation encouraging sales of new gus-guzzlers, Feinstein and Collins were among the critics urging that the purchased vehicles get better gas mileage in order to qualify for the thousands of dollars in cash vouchers. Along with Sen. Charles Schumer (D-N.Y.), they have sponsored of a more environmentally minded cash for clunkers program.

They lost that fight, but considering the popularity of the program, they might have more leverage the second time around. Indeed, the defenders of the existing program can no longer fall back on the argument that lax eligibility is needed to encourage participation.

Earlier in the year, Detroit’s powerful defenders on Capitol Hill pushed through legislation that effectively allowed consumers to trade clunkers for new clunkers — a boon to the automakers and dealers who were having trouble selling larger vehicles, but hardly a recipe to reduce emissions in any meaningful way.

At least one member of the Michigan delegation, Sen. Carl Levin (D), is already urging additional funding for the program.

“We have been told by the White House that people can keep buying cars under the program until further notice,” Levin said in a statement Friday. “We don’t know how long it will last, so people should go to their car dealers now if they want to take advantage of the program.  We’re also going to seek additional funding to hopefully make the program last longer.”

But others are vowing that, if the program is to be extended, the eligible vehicles should get better gas mileage. Sens. Dianne Feinstein (D-Calif.) and Susan Collins (R-Maine), who had pushed legislation hinging the cash subsidies on better fuel efficiencies, issued a statement yesterday vowing to fight additional funding unless some changes are made.

We believe that any extension of the ‘Cash for Clunkers’ program must go further in advancing the goals of better fuel efficiency and greater emissions reductions. We will not support any bill that does not meet these goals.

They have this in their favor: Levin and the other automaker defenders can no longer claim that eligibility thresholds have to be kept low to encourage participation.

But consumers, it seems, are on the edge of their seats awaiting the program’s launch. At least that’s the word from Transportation Secretary Ray LaHood, who told Bloomberg yesterday that the government’s cash-for-clunkers Website received 400,000 hits in one week alone.

Consumers will be able to visit auto dealer showrooms as early as July 24 for credits of as much as $4,500 to purchase or lease new vehicles under federal rules now being crafted, LaHood said in a telephone interview yesterday.

“There are going to be thousands of cars sold that would’ve never been sold,” LaHood said. “This is the strongest incentive I have ever seen offered by car manufacturers. If this doesn’t work, I don’t know what will.”

LaHood’s comments came one day after the Environmental Protection Agency approved a long-standing California request to adopt stricter emission standards for the state’s vehicles — a move that will effectively force automakers to offer more fuel-efficient cars and trucks.

Yet cash-for-clunkers doesn’t exactly encourage any swift move to vastly better fuel efficiencies. Under the program, for example, drivers of 1996 4WD Ford F150 pickups (fuel efficiency of 14 mpg) could trade them in for 2009 4WD Ford F150 pickups (15 mpg) and receive $3,500 in taxpayer cash. The owner of a 1994 2WD Jeep Grand Cherokee (16 mpg) would be eligible for $3,500 with a trade-in for the 2009 version of the same vehicle (18 mpg). And consumers could trade their 1995 4WD Dodge Ram pickups (13 mpg) for $4,500 toward brand new 4WD Hummer HT3s (16 mpg).

At least Washington’s policymakers are finally coming to grips with what the program actually represents: An automaker bailout with a slight environmental component, not an environmental program that would also sell cars.

Under the program, owners of cars rated at 18 mpg or less in combined highway and city mileage could turn them in for a cash voucher. Buying a new car rated at least 4 mpg higher would earn a $3,500 voucher; a 10 mpg improvement would earn a $4,500 voucher.

Pickups would be eligible as long as the new vehicle has a mileage rating of at least 18 mpg and is at least 2 mpg higher than the old vehicle. A new truck rated at least 5 mpg higher than the turned-in vehicle would earn a $4,500 voucher.

For even larger trucks, the fuel efficiencies of the new purchases must show even less improvement over the trade-in.

The program is expected to cost $4 billion, meaning the $1 billion approved yesterday is just the start. Some Senate Democrats, notably Sen. Dianne Feinstein (D-Calif.), are pushing for stronger fuel efficiency standards for new purchases as a condition of receiving the cash gift. She’ll have her shot the next time the program comes up for a vote, likely at the end of the summer.

[W]hen the federal General Services Administration announced this week that it had spent $287 million in stimulus money to buy 17,205 new cars, it turned out that the biggest beneficiary was the Ford Motor Company, the only one of Detroit’s Big Three automakers that has not received a government bailout.

The General Services Administration, which manages a fleet of 213,000 vehicles for some 75 federal agencies, said it spent $129 million to buy 7,924 Fords; $105 million on 6,348 General Motors vehicles; and $53 million on 2,993 Chryslers.

Like buying Verizon stock, then grabbing an iPhone.

We’ve seen this with the banks — which were asked not to make bad loans at the same time they were asked to increase lending — and now we’re seeing it with the automakers, who have been requested to trim their fat just before being attacked for closing plants and reducing the number of dealerships.

The latest attack occurred yesterday in a hearing of the Senate Committee on Commerce, Science and Transportation, where Chairman Jay Rockefeller (D-W.V.) went after some of Detroit’s executives for their plans to cut back on dealerships (from The Washington Post):

“Let me be very clear — I don’t believe that companies should be allowed to take taxpayer funds for a bailout and then leave local dealers and their customers to fend for themselves with no real notice and no real help. It’s just plain wrong,” he said.

I don’t mean to defend these industries, whose long history of poor decisions led to their own demise. But if the recovery is to be successful, is it too much to ask for some consistent messaging out of Congress?

Well, it seems that some industry executives haven’t been willing to take the pay cut. The Washington Post reported today that Chrysler Financial — the lending arm of the withering automaker — lost out on $750 million in federal help because some executives refused to accept Washington’s pay limits. The development means that the company will have to take out its loans from private banks at higher rates, according to The Post.

Most of the agreement was in place, sources said. But on April 7, Treasury asked Chrysler Financial to have its top 25 executives sign waivers regarding their compensation, according to sources familiar with the matter who declined to talk publicly because they were not authorized to speak.

Within a week, the company responded that some of the executives had refused to give their approval. By last week, Treasury had rescinded the loan offer, the sources said.

Chrysler Financial is denying that this is the case, arguing that the company — which has already accepted $1.5 billion in emergency help from Washington — is healthy enough that it doesn’t need more, The Post reported.

“Chrysler Financial has determined that it has adequate private capital funding to cover the short-term needs of our dealers and customers and as such no additional TARP funding is necessary at this time,” the company said in its statement.

That turns this into an all-too-common he-said/she-said saga — and all the sources anonymous. We’re eagerly awaiting more details.

That cash, gifted to General Motors ($13.4 billion) and Chrysler ($4 billion) in December was intended to keep the companies from going bankrupt before April, when they would require more.

Asked today by CNN’s Dana Bash where the money went, Levin said, “We have not been briefed on that.”

One question: Is it strange that one of Washington’s loudest cheerleaders for additional Detroit bailout funding would have no clue where the money is going?

“The program will provide supply companies with much-needed access to liquidity to assist them in meeting payrolls and covering their expenses, while giving the domestic auto companies reliable access to the parts they need,” the Treasury announcement said. [...]

Suppliers will get a government guarantee that money owed them by auto manufacturers for parts will be paid “no matter what happens to the recipient car company,” according to the Treasury statement.

As we pointed out in December, the auto-part suppliers have been too often ignored in the debate over whether to save Detroit’s automakers — not least of all because, with thousands of small companies nationwide, most suppliers aren’t too big to fail. The White House plan seems to recognize their importance to the larger economy. It doesn’t, however, answer the larger question of how to get Americans buying new cars again.