SOUTH BEND — A bill to refuel the government's cash for clunkers program is on its way to the White House after the U.S. Senate approved a new injection of cash. Supporters say it will boost sales well into the fall, but a new study suggests the program could take cash away from other sectors of the economy.

The 60-37 Senate approval Thursday night clears the way for an additional $2 billion in funding for the Cash For Clunkers program. It came just as the popular program was about to sputter out.

President Obama is expected to sign the bill Friday. He said it will boost auto sales well into the fall.

"Cash For Clunkers has been a proven success: the initial transactions are generating a more than 50% increase in fuel economy; they are generating $700 to $1,000 in annual savings for consumers in reduced gas costs alone; and they are getting the oldest, dirtiest and most air polluting trucks and SUVs off the road for good," Obama said in a statement.

Kathy Parker and her mother, Irene Vanderheygen, were just two of the thousands hoping to cash in Thursday.

"We're buying a new car," said Kathy. "And we want to use the cash for clunkers."

"It's a 1990, and it's old! It's a clunker," agreed Irene with a smile.

Irene's 1990 Mercury qualified for a $4,500 rebate when she traded it in for a brand new Chevy Aveo at Gates Chevy World in Mishawaka.

It was precisely the push they needed.

"[We wouldn't have gotten a new car] without the cash for clunkers program, no. No, I don't think so," Kathy said.

It's become a common story on car lots across the country. Overflowing inventories are suddenly on the way down, and sales are suddenly way up.

"We're still generating quite a bit of traffic from it," said Gates Chevy President Matt Helmkamp. "Every day we get calls from people wanting to know, does my car qualify? It's been a great program. There's been lots of interest. And, it kind of stirs the pot a little bit and gets people excited about buying a new car."

A new study from Purdue University's Retail Institute suggests all that success could be driving the nation's retail sector down the wrong road, perhaps even shifting it into reverse.

"One of the unintended negative side effects of the cash for clunkers program was that it's going to remove money that probably would have been spent in retail stores and restaurants and is now going to go toward a car payment," said Purdue Consumer Sciences Professor Dr. Richard Feinberg.

And not just "spare change."

Feinberg estimates the nation's retailers could lose up to $300 million a month as consumers spend their disposable income on loans instead of lunch. By the end of what's expected to be another tough holiday shopping season, losses could add up to between $1.5 billion and $2.5 billion, Feinberg says.

That's a full 3-5% below losses already felt this year.

"I think that is going to have the opposite effect. Although the overall figures will probably show an increase in the economy, when you take out automobiles, ex[cluding] autos as it's called, it's going to show that retailers are going to have an even harder time than they imagined," Feinberg said.

It's called a "substitution effect," and experts say it is a very real possibility.

"There could be some kind of substitution effect, with consumers going for cars instead of clothing," Credit Suisse economist Jonathan Basile said during a conference call with Dow Jones on Tuesday.

"The effect could be somewhere between 3% to 5% in retail sales for the back to school season, which is very important to retailers. Then, the holiday season, which is the most important quarter to retailers, there's going to be $1.5 to $2.5 billion that's not going to be out there to spend on consumer goods and services," Feinberg said.

If that effect is large enough, Feinberg believes it could end up pushing hopes of economic recovery well into next year.

"The retail economy is much more important than the auto economy. So, as a retail expert, I would say what we really need is a cash for retailers, not cash for clunkers" he said.

Some economists argue cash for clunkers can mean cash for retailers.

"In terms of economic recovery, I think you could make the argument that the money could be better spent elsewhere. Because, it is a subsidy. On the other hand, I feel like, if there's a psychological lift, it can spill over from the auto into the other retail sector," said Saint Mary's College Economics Professor Dr. Jerome McElroy.

"There's always a substitution effect if you're buying 'x' and not 'y.' But consumer confidence does go a long way, and it's also linked to investor confidence. And, of course, investor confidence affects wealth, and that affects people's spending," McElroy continued.

President Obama also points to fuel savings earned because of newer models.

That money, too, could become disposable income.

Others have suggested that the program simply give cash to consumers, rather than cash for clunkers.

McElroy says that rarely accomplishes the economic stimulus its intended to create.

"If you give it to taxpayers, there's always the serious problem that they're going to save a good portion of it. And that's happening now as we see the savings rate rising," he said.

Parker and Vanderheygen admit they probably will be saving more, because of the new car.

"We might have to cut back a little bit. Everybody will have to cut back so we can have a nice car," Parker said.

"It might be pinching pennies, yes," agreed Vanderheygen.

The question now from retailers everywhere: for how long?

July retail sales numbers out Thursday showed an 11th straight month of declines. Sales in July were 5.1% lower than July 2008. That's up from June's same store yearly sales decline of 4.9%.