Friday, July 31, 2009

Cash-For-Clunkers is Out of Cash

If you haven't gotten that $4,500 from the government for your junker, you may be out of luck:

White House officials and lawmakers were studying late Thursday how to keep alive the government's cash-for-clunkers incentive program because of concerns the program's $1 billion budget may have been exhausted after just one week.

Obama administration officials warned congressional leaders Thursday it planned to suspend the program at midnight. But the White House released a statement late Thursday saying that completed deals would be honored and the program is still under review.
But there were problems even before the program ran out of money -- that is to say, pretty much immediately. Dealers are reporting the morass of complications that's typical of government bureaucracy:
The Cash for Clunkers program, which allows qualifying consumers to scrap their gas guzzlers for a government rebate of $3,500 or $4,500 on a new, more fuel-efficient vehicle, has auto dealers throughout west central Minnesota reporting greatly increased traffic, but countless forms to fill out and pages of regulations to page through for each deal.

Scott Lambert, vice president of the Minnesota Auto Dealers Association, said that he has heard a lot of frustration in his conversations with auto dealers in the past week.

“This is quickly turning into a nightmare for Minnesota dealers,” he said. “They’re scanning in 20 pages for every deal. If one detail doesn’t match up, it won’t get approved.”
Dealers are struggling to process mountains of paperwork that require many hours to complete, some in their pajamas.
Employees worked around the clock, taking breaks to nap in the owner's office using sleeping bags set up in the closet. Three workers manned the computers at all times.

The program's computer system appeared not to have been set up to handle the amount of traffic it was getting.

After spending four hours to process one deal, an error message popped up. . .
Some dealers have suspended participation, on concerns that the program will run out of money (a well founded worry, as it turns out) and they won't be reimbursed for the rebate. In other words, they believe it may be too risky.

Unbelievably, that's not all. The EPA ratings for some cars were changed midstream for those who had already qualified. (Reminds me of what the auto sales industry calls a "bait and switch".) The result: cars that qualified last Friday did not qualify on Monday. For some, the purchase was already under way when their clunker was suddenly disqualified.

The House voted today to transfer $2 billion to the cash-for-clunkers program to keep it afloat, so the program is (thus far) costing three times the original price tag. I haven't been able to find an estimate on what the program cost the economy for the hours spent fulfilling draconian 20-page-per-clunker paperwork requirements.

Now, all this angst and nonsense (achieved in a single week) was for a simple rebate deal. What unfathomable maze will these wizards of budgetry create when they revamp one fifth of the economy to bring us a health care "overhaul"? How well did they estimate the cost? What if it were surgery approval, and not a clunker rebate approval, for which requirements changed overnight? What consequences will one wrong detail in the paperwork have then? Will their health care overhaul really improve anything?

Are you ready to bet your life?

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