What a shame.
What may well be the best idea yet from the Obama administration is so seriously flawed that, after only a week of overwhelmingly enthusiastic response from the public, it is not only running out of funds, but is also being badly mishandled by the government, according to auto dealers across the nation.
Formally known as the Car Allowance Rebate System (CARS), Cash for Clunkers offers up to $4,500 to consumers who trade in their old car, SUV or light truck for a new vehicle which gets at least 2 mpg EPA rated combined city and highway (the sticker mileage rating) more than their “clunker.” The higher the mileage increase, the more the consumer receives, to the maximum of $4,500. The public knows a good deal when it sees one, and has literally flooded showrooms all across the nation.
The idea, simple and elegant, literally has something for everyone: it offers a stimulus that actually does stimulate and is truly attractive to the public, benefiting them and the economy at once. Thanks to their unqualified embracing of Cash for Clunkers, car sales are skyrocketing, as customers return to auto showrooms in droves, stimulating both manufacturers and their hard-hit dealer networks. Further, by encouraging Americans to trade in their old, gas hog cars in a way that is both attractive to, and beneficial for consumers, Cash for Clunkers is thus far the best attempt yet by the Obama administration to offer a viable means of cleaning up the environment.
Unfortunately, the program is seriously flawed and poorly executed. Funded at just under a billion dollars, it is already running out of money, less than a week into the offer. Unlike the financial bailouts, this program actually helps not only the economy, but more importantly, the American consumer, yet no one in the administration had the foresight to see how popular it would become. Administration officials are scrambling, belatedly, to find more funds before the disappointed public, already being turned away from dealerships afraid of being stuck with the up to $4,500 per vehicle tab, loses interest.
For their part, dealers are complaining that, besides being underfunded, the execution of Cash for Clunkers leaves a lot to be desired:
A survey of 2,000 dealers by the National Automobile Dealers Association found about 25,000 deals had not yet been approved by NHTSA, or nearly 13 trades per store. It raised concerns that with about 23,000 dealers taking part in the program, auto dealers may already have surpassed the 250,000 vehicle sales funded by the $1 billion program.
Dealer complaints range from the excessive paperwork involved to close a deal, to the agonizingly slow response times they are experiencing from the Transportation Department's National Highway Traffic Safety Administration (NHTSA), the bureaucracy charged with administering the program. In Minnesota, not a single dealer has received payment from the government for cars sold under the program.
According to the Minneapolis Star Tribune,
Scott Lambert, executive vice president of the Minnesota Auto Dealers Association, said Minnesota dealers have $10 million at risk. He said that a survey he completed at 1 p.m. Thursday found that no Minnesota dealers' submissions had been approved.
"This whole thing is a pile of junk," he said. "The program is a clunker."
Lambert said the program's 138 pages of rules, combined with a federal online system that continuously freezes up when dealers try to enter their submissions, leave him baffled as to how the money allocated for the program could already be drained. As of Thursday morning, the cash for clunkers website listed $858 million left for redemption, he said.
"Where did the money go?" he said. "This is outrageous. This is as big a mess as I can imagine."
Auto manufacturers advertised the program heavily during the weeks before it became effective a week ago today, on July 24. Many dealers are beginning to regret their participation in the program, as they see the government's indebtedness to them pile up, with no payments forthcoming, even as the media trumpets the fact that Cash for Clunkers is already out of cash.
What a shame.
One can only wonder if, when universal health care is finally adopted, that legislation will be better planned, adequately funded, and efficiently administered, or will it be another CARS debacle?