Friday, July 31, 2009

Cash for Clunkers a ball of confusion

By Donald Sensing

Has the "Cash for Clunkers" program been suspended? Cancelled? Is it already out of money, or just backlogged so much that the feds don't know how much money they have to send out, or to whom?


Or all of the above?

First, the feds announced that the CARS program ("Car Allowance rebate System," how cute) was out of money. Or at least that was what the media understood because almost all the ledes on Google News about the program say that the programs burned through $1 billion in less than a week. One billion dollars was the Congressional authorization for the program.

But wait - the program's official web site, cars.gov, says (as of 7.30 a.m. CDT today) that there are still "$779M Estimated funds remaining for all vehicles except for CAT3 Trucks. $75M Estimated funds remaining for CAT3 Trucks."

But that does not tell us whether the program has actually paid out $146 million or whether that is the amount applied for with some still due out. This morning the government is saying that the program has not been suspended.

The NYT, however, indicates that CARS is molasses slow in sending the checks to the dealers, who have already rebated the $3,500-$4,500 to buyers. The dealers send in the paperwork to CARS, which validates the validity of the tradein before sending the money to the dealers.
“I’m waiting for the government to reimburse me for over $80,000,” Barry Magnus, general manager of DCH Paramus Honda, in Paramus, N.J., told us. He has completed deals on about two dozen cars, advancing his customers the rebates of between $3,500 and $4,500 each while he waits for the government to repay him.
So has the program been suspended or has it been ended due to exhaustion of funds? No one knows, even the people running the program. Says the Times writer,
In an unexpected move, the government halted the program, saying it proved so popular with the public that it ran out of money in just four days of official operation. The White House later told us and others on background that the program had not been suspended, but hastened to add that all deals in the hopper before midnight Thursday would be honored — making it sound as if it had been suspended.
My take:
  • the CARS agency was unprepared for the number of applications it would receive.
  • It was neither staffed, equipped nor trained to handle the workload.
  • While CARS probably knows how much money it has actually mailed out ("probably" know, I said) it has no idea how much money is tied up in unprocessed applications
Maybe today they'll figure out how to proceed. And maybe not.

And remember - this is the Congress and administration that wants to handle your health-insurance budget and payments all the time, not just one time. Yeah, that makes me feel good.

1 comment:

jaxon said...

Read this article: The Real Reason for the "Cash for Clunkers" Suspension. The ex car salesman blog shares exactly why they stopped the program. Even reports that some sales managers are calling asking for the money back because they were denied the rebate when the final paperwork was submitted but their car was already ruined by dumping a solution in the engine. They now have no car. Scary. See: http://tinyurl.com/ml9sdo