Get Your Gubbermint Welfare While You Can
"Cash for clunkers" burned through its $1 billion budget in less than a week, write Martin Zimmerman, Tiffany Hsu, and Jim Puzzanghera in the LA Times:
With surprising swiftness, the government's "cash for clunkers" program has burned through its $1-billion budget in less than a week as car buyers swarmed dealerships, and federal officials were scrambling late Thursday night to find more money to keep it going.The program, designed to jump-start car sales and improve the fuel efficiency of the nation's auto fleet, unleashed a wave of pent-up demand that threatened to exhaust funds before dealers could be fully reimbursed for rebates under the plan.
As word got out Thursday that the program might be suspended at midnight, some car dealers reported a surge in nighttime buyers. But government officials later said the program -- dubbed CARS for Car Allowance Rebate System -- was not going to be suspended overnight.
"We are working tonight to assess the situation facing what is obviously an incredibly popular program," the White House said. "Auto dealers and consumers should have confidence that all valid CARS transactions that have taken place to date will be honored."
Buyers rushed to dealerships before the money ran out. At Toyota of Hollywood, general manager Don Mushin said he expected to sell 15 vehicles before closing Thursday.
"It's a mad rush right now with people bringing in their clunkers," he said. "The whole place is full."
Car sales have been in the tank for more than a year as the nation's deepening recession and growing ranks of unemployed turned the market into the worst one in decades and helped send General Motors Corp. and Chrysler into filing for bankruptcy protection this year.
The federal program provided rebates of $3,500 or $4,500 to consumers who traded in vehicles with combined city/highway mileage of 18 miles per gallon or less and bought more fuel-efficient new cars or trucks.
The program was designed to run until Nov. 1 or until 250,000 cars had been sold, whichever came first. Many analysts had expected the money to last at least until Labor Day.
And in true Obama-ian fashion, guess who gets left holding the bag (if that was was hard for you, it's business and 4 is the answer to 2 + 2):
Although the White House is providing reassurances that dealers won't lose money, that could happen based on the cash for clunkers rules. Dealers are required to give qualifying buyers the $3,500 or $4,500 discounts and then apply to the government for reimbursement. Dealers who apply for repayment after the funding runs out will not be reimbursed, according to the program's rules."There's a big concern among dealers that this thing may run out of money and they don't want to be stuck holding the bag," said Michelle Krebs, senior editor of AutoObserver.com.
To make matters worse, dealers are required to permanently disable the engines of clunker trade-ins before they can apply to the government for repayment, Krebs said. If payment is denied, the dealer is out the advanced discount and has a car with a ruined engine that can't be resold.
So is anybody surprised by any of this? The only thing that surprises me is that I didn't think the program would implode quite this fast. Never underestimate the power of government!
Cousin Dave at July 31, 2009 6:52 AM
I looked at this with amazement...
... because the key to conservation is to conserve, not "buy something with Federal aid".
I have a 23-year-old Nissan pickup - with 464 thousand miles on it (I know, because it's always been mine). Its fate with me is to get automotive "eldercare" as it runs a few errands, towing and hauling much more and easier than you'd expect looking at ads for 300+HP turbo dually fantasy trucks.
Its fate as a "clunker"? The crusher, after its engine is destroyed. In that case, it won't be parted out, it won't be donated to charity.
Its replacement, oddly, would be another Nissan or Toyota, because the Fed plan does NOTHING to solve what is wrong with American car companies.
And the people with hybrids still have to figure out what to do with that main battery when it fails.
Nice distraction, this plan. So government is actively aiding its own destruction, showing the public how it can vote itself money.
Radwaste at July 31, 2009 7:01 AM
an incredibly popular program
Well, duh. Of course it's popular. They're giving away thousands of dollars, for heaven's sake!
kishke at July 31, 2009 7:05 AM
Let me get this straight. The government is going to "give" me $4500 to take on a new 5 or 6 year long debt obligation for a vehicle that gets marginally better gas mileage than the one I presently have.
Oh, wait - mine doesn't qualify - it already gets better than 25 mpg.
This is another one of those wonderful liberal feel-good anti-SUV campaigns. Like people are going to turn in their 3 year old RX450 for a Chevy Malibu.
Ninja, please.
brian at July 31, 2009 7:09 AM
Raddy, you say that the clunkers fate is The crusher, after its engine is destroyed. In that case, it won't be parted out, it won't be donated to charity.? And so, then what? The engine isn't being recycled, and none of the cars' parts are going to be recycled? It's all just destined to sit in a boneyard somewhere? And this is good because...?
Flynne at July 31, 2009 7:49 AM
The Jeep gets a combined 18.5. Oooh, so close! Dang. Almost got to go back into debt. Well, I'm sure there will be other opportunities.
Gog_Magog_Carpet_Reclaimers at July 31, 2009 8:35 AM
I saw a Ford ad advertising this yesterday, and was hoping it was an actual Ford funded thing as opposed to the government. Silly me!
I've donated a piece of crap/unable to pass the smog test without $1200 of fixes car to a scrap place. I actually got $25 for it and they'll remelt the metal for something else.
Stacy at July 31, 2009 9:26 AM
Flynne,
What's missing is that this isn't even a patch on smog or other resource problems - and, as I pointed out, it doesn't automatically save GM.
When a vehicle like mine goes to the used-car lot run by, say, the Salvation Army, it gets presented to people who can afford it.
They can't afford years of payments on a new car, which, by the way, has mandatory service requirements to keep its warranty AND requires full insurance.
You DO know how much you have to drive a car to make up a $10K price difference in fuel costs, right?
I think we all need to go look at scrap rate figures.
This is encouraging yet more private debt.
Radwaste at July 31, 2009 9:47 AM
Yeah, that's what I figured, Rad. Which is why I decided to stay in my Kia. I don't need no steenkin' new car, man.
Flynne at July 31, 2009 10:09 AM
Brian, I'm steamed about that too. Because I was smart enough to buy an efficient car 13 years ago, I don't get free money now.
Cousin Dave at July 31, 2009 10:27 AM
Well, it's not "free" money. What it really means is that my taxes are going to go up by some fraction of $4500 so that someone else can get a $4500 discount on a car.
brian at July 31, 2009 10:50 AM
Obama and the Democrats could get so much more support, and win every future election, if they would really satisfy the giveaway desires of the people
Obama Explains Millionaire Grants (smile)
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Future News:
It is just weeks after Barack Obama won the 2012 election to his second term as President. White House Press Secretary Robert Gibbs provided some details today about President Obama's campaign promise to "make 95% of all citizens a millionaire".
Participants must earn less than $50,000, with a net worth less than $50,000. They must be a legal resident for 3 years at the time of the grant. Illegal status will incur a $10,000 penalty in exchange for immediate citizenship. Gibbs said: "It just seems fair not to spoil such a happy event because of a technicality".
(continued at link)
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Andrew_M_Garland at July 31, 2009 11:23 AM
I have 2 vehicles that could easily qualify. One is pad off, the other pays off in October.
But at this point I want the monthly payment to pay off the rest of my bills. I want to be out of debt, much more than I want the "gas savings". My commute is 26 miles. The savings would take forever to be realized.
Jim P. at July 31, 2009 6:00 PM
These problems with the cash for clunkers programs come to my mind:
1. Future sales of cars are being robbed for the sake of the present.
2. This measure is increasing the interest-bearing federal debt.
3. This measure is further politicizing the American economy. The ranks of those who will only spend money for purchases of these sorts when there's a government inducement will grow. (The National Association of Realtors wants the federal government to increase the current federal credit of $8,000 for purchase of a home to $15,000. Whatever happened to the once promoted notion of government neutrality regarding the marketplace?)
4. Government has a terrible track record when it comes to being able to effect desired outcomes when it intervenes in such fashions. (Not that I'm a promoter of gas guzzlers.) Some of the people reading this are probably too young to know this.
5. Some people will probably drive more if they get a better mileage vehicle, partially or entirely offsetting its supposed benefit of reduced gas usage.
6. It takes energy to make a car - and transport it from factory to dealer. The energy required to do this is not accounted for by those who are promoting this.
7. An increase in the gas tax would be a much better and more simple motivator for people to change their wasteful ways.
I'm sure there are many other demerits that I haven't listed.
Iconoclast at August 1, 2009 5:21 PM
So we just spent over a billion dollars to buy scrap metal from Americans, and put them back into debt.
The housing bubble came about because people that normally rented decided to buy, and got into debt.
Our government seems intent on getting us back into debt in order to help us. Why not give 4500 in grants to people to start their own business? That would at least create some jobs.
Ryan at August 1, 2009 8:58 PM
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