A proposal to help boost US auto sales was withdrawn late on Thursday and the fate of another was unclear, despite strong endorsement from president Barack Obama, as senate consideration of economic stimulus legislation accelerated.

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Iowa Democrat senator Thomas Harkin pulled an amendment that would have provided US$16bn in rebates to buyers of new fuel efficient vehicles who traded in their old, poor performing models, saying he would defer the so-called “cash for clunkers” proposal, which had strong support from US automakers, Reuters reported.


Lobbyists for those companies this week called it a genuine stimulus for a depressed market – US 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, Reuters noted.


The provision required that the vehicle be assembled in the United States.

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The report said Lawmakers also are weighing proposals in and outside of stimulus legislation to fund battery research for plug-in hybrids and other alternative fuels.


Also under consideration in the senate stimulus bill is a $600m plan for the government to purchase tens of thousands of fuel efficient vehicles to replace inefficient models in the fleet.


Obama on Thursday struck back at critics of the plan, saying that it would reduce petrol consumption and help revive sales.


“It will not only save the government significant money over time, it will not only create manufacturing jobs for folks who are making these cars, it will set a standard for private industry to match,” Obama said in an appearance at the Energy Department.


But senate minority leader Mitch McConnell called the new vehicle programme wasteful spending, Reuters said.