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EDITORIAL: Crash the clunkers
Question of the Day
The Obama administration has declared its "cash for clunkers" program a "success." If the Car Allowance Rebate System is the Democrats' model for bureaucratic competence, we're afraid to see how they would administer a government-run health care system.
The $3 billion clunkers initiative proved extremely difficult to administer. The original $1 billion in funding was supposed to last until October but ran out in July after just six days. To keep the subsidies flowing, the administration was forced to go hat in hand to Capitol Hill to ask for more cash. The additional $2 billion appropriated by Congress only made it until Aug. 24 before the spigot ran dry again.
Management of the program has been even more slapdash than the careless way that $3 billion was thrown to the wind. Electronic applications did not work, paperwork was lost, and commercial correspondence ran weeks behind. Dealers were supposed to be reimbursed within 10 days for the thousands of dollars paid out to those who had traded in their cars. At the beginning of this month, however, dealers still were waiting for payments owed to them since July.
Billion Auto in Sioux Falls, S.D., sold 1,000 cars under the program. This means Billion Auto accepted 1,000 clunkers as trade-ins while relying on the government to pay back the dealer for all the jalopies on its lot and all the junk it paid to send to the car crusher. Its owner, Dave Billion, said this week that he still was owed $3.2 million from the government.
"I wonder how long they'd wait if I owed them $3.2 million. I think they'd be at my door or at least my banker's door," Mr. Billion said. "The program started in July, and we haven't gotten paid for cars we sold back then, but then, on the other hand, we got paid for a car we sold last week. They don't have an accurate format. It's not like they're taking the first deals that were submitted and working those. I don't know how they're doing it; no idea. I know it's very random."
The dismal tale is the same across the country. In Chicago, Westfield Ford reports, "We had 102 cash for clunkers. We've been paid for one." Ettleson Hyundai, also in Chicago, has a slightly higher percentage: "Out of 142 deals they owe us for, we've gotten paid on seven."
By Thursday, 10 days after the program ended, the Department of Transportation said it had paid off just 17 percent of all the claims that had been made.
The cash for clunkers program did not benefit American automobile companies the way the Obama administration promised. About 60 percent of the vehicles purchased with taxpayer subsidies were foreign. The only Detroit vehicles in the top 10 were the Ford Focus and Ford Escape.
General Motors' sales are reported to be down 20 percent in August compared to the same period last year. Chrysler sales dropped 15 percent. At Ford Motor Co., the only other domestic auto manufacturer, sales jumped 17 percent compared to last year. Ford's success likely can be attributed to a combination of public support for its impressive lineup of new models and overwhelming enthusiasm for the family-run firm's commitment not to seek a federal bailout. Foreign companies such as Toyota, Honda and Hyundai also had slight sales increases in August.
Any jolt to car sales that might be related to the cash for clunkers program will prove to be temporary. Car sales are bound to decline because the subsidy induced hundreds of thousands of consumers to buy vehicles sooner than planned, and they, thus, won't need new wheels for a while. Jump-starting works on a dead battery, but it doesn't have a lasting effect on a dying economy.
About the Author
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