Auto "clunker" proposal withdrawn from U.S. stimulus

WASHINGTON (Reuters) - One proposal to help jump start U.S. auto sales was withdrawn late on Thursday and the fate of another was unclear, despite a vigorous endorsement from President Barack Obama, as Senate consideration of economic stimulus legislation accelerated.

Sen. Thomas Harkin, an Iowa Democrat, pulled an amendment that would have provided $16 billion in rebates to buyers of new fuel efficient vehicles who traded in their old, poor performing models.

Harkin said he would defer the so-called "cash for clunkers" proposal, which had strong support from U.S. automakers.

Lobbyists for those companies this week called it a genuine stimulus for a depressed market. U.S. auto sales plunged to a 27-year low in January.

There was no backing, however, for the plan from foreign manufacturers whose operations are clustered in states represented by conservative Republicans.

The provision required that the vehicle be assembled in the United States, a nod to General Motors Corp, Chrysler LLC and Ford Motor Co, all struggling financially and all based in economically hard-hit Michigan. Those companies' domestic operations are unionized.

Automakers and suppliers are pushing hard for additional help from Washington, which extended GM and Chrysler a $17.4 billion bailout in December.

The Treasury Department has extended domestic auto finance companies capital to help stimulate lending and is considering additional steps to unlock tight consumer credit.

Still, U.S. automakers are banking on additional assistance from Congress.