Thursday, August 20, 2009

WHAT "Cash For Clunkers"??

Oh, dear. This not very good advertising for the way the Feds run programs. It seems that while the so-called "Cash for Clunkers" program is a HUGE success, the automobile dealers are not getting reimbursed for all of the money they have shelled out. At least one, MAJOR, state has had it, as this headline indicates, NY Dealers Pull Out Of Clunkers Program. In my own state, dealers are waiting for payback, too. They aren't too thrilled about being out $225,000, in the case of one local dealer.

And again, the top cars being purchased are FOREIGN - Toyotas and Hondas are the ones being bought the most, with Ford Focus thrown in there. Just to be clear. (Toyota and Honda are non-unionized, just in case you are keeping score.)

NY state dealers have had it with the program:
Hundreds of auto dealers in the New York area have withdrawn from the government's Cash for Clunkers program, citing delays in getting reimbursed by the government, a dealership group said Wednesday.

The Greater New York Automobile Dealers Association, which represents dealerships in the New York metro area, said about half its 425 members have left the program because they cannot afford to offer more rebates. They're also worried about getting repaid.

"(The government) needs to move the system forward and they need to start paying these dealers," said Mark Schienberg, the group's president. "This is a cash-dependent business."

You betcha it is. Check out just how quickly the dealers are getting reimbursed for their cash outlay:
The program offers up to $4,500 to shoppers who trade in vehicles getting 18 mpg or less for a more fuel-efficient car or truck. Dealers pay the rebates out of pocket, then must wait to be reimbursed by the government. But administrative snags and heavy paperwork have created a backlog of unpaid claims.

Schienberg said the group's dealers have been repaid for only about 2 percent of the clunkers deals they've made so far.

Many dealers have said they are worried they won't get repaid at all, while others have waited so long to get reimbursed they don't have the cash to fund any more rebates, Schienberg said.

"The program is a great program in the sense that it's creating a lot of floor traffic that a lot of dealers haven't seen in a long time," he said.

"But it's in the hands of this enormous bureaucracy and regulatory agency," he added. "If they don't get out of their own way, this program is going to be a huge failure."

"If they don't get out of their own way..."Wow. That's a pretty telling comment right there, isn't it? And that sounds SO like the Federal Government, too, doesn't it Uh, yeah, sure:
The program is administered by the Department of Transportation. Transportation Secretary Ray LaHood said Wednesday that dealers will be repaid for the clunkers deals they have completed.

"I know dealers are frustrated. They're going to get their money," LaHood told reporters. He said the Obama administration would soon announce how much longer the $3 billion car incentive program will last.

Through early Wednesday, auto dealers have made clunkers deals worth $1.81 billion, resulting in 435,102 new car sales, according to the DOT.

This begs the obvious question: if the Federal Government is incapable of reimbursing these automobile dealers for less than half a million cars, how in the HELL do they think they are going to be capable of running health care for millions and millions of people? That is to say, their track record just isn't great in this area.

And that is what makes the current threat by Harry Reid to use the "Nuclear Option" to push through what the Wall Street Journal says is "the most expensive part of the plan."

Oh - and the "Nuclear Option," in case you don't know, is a simple majority. Not a veto-proof one, a simple one of 51 - 49.

And they WONDER why so many people are hesitant to have the Feds control our health care? Really?? Wow - kinda makes you wonder about them making decisions for us about, well, EVERYTHING, doesn't it? Holy smokes...


Alessandro Machi said...

Car dealers are also running out of SPACE to store the clunkers until they are destroyed.

Rabble Rouser Reverend Amy said...

That is exactly right. From what I read in my local paper, they are hesitant to do anything with them quite yet, until they get their money. I can't say as I blame them, but yes - they take up a lot of space...

Anonymous said...

You know I love you Amy, but I think you are being contrary just to be contrary here.

As much as I don't like Barack Obama, and you know I don't, let's be realistic about the amount of time needed to process the credit. This program started in July. Per your post, it has been wildly successful, so much so that it has generated nearly half a million in new car sales since it began in July and the dealers are bitching because they didn't get their government credit as fast as they'd like?

This program was set to run for five months from July 1 to November 1 (page 5) or until the appropriated funds ran out (whichever came first), and that happened this month after only 7 weeks of the program. That the people who are verifying the sales and legitimacy of the claims might be a tad overwhelmed and backlogged should go without saying.

As for the dealers, did they or did they not make a sale they would otherwise NOT HAVE MADE if not for the program? Wow, cry me a river.

And I'm really distressed to see you adopt the "if the government can't do this how can they 'run' health care" right-wing talking point. Apples and oranges.

Rabble Rouser Reverend Amy said...

Bluelyon - I hear you, I do. But it does seem like a lot of dealers are being hung out to dry while they wait and wait for reimbursement. One dealer is out over a million dollars right now. She has gotten reimbursed for on;8 8 out of 1400+ vehicles.

So, yes good on selling, but HORRIBLE in terms of reducing/reusing/recycling materials since these cars, even if they are in decent shape, are COMPLETELY destroyed, with NO parts available for spares. That's just obscene.

While successful on some levels, you have to look for whom it was successful. Moreover, it was a program done for American manufacturers, yet the vast majority of cars being bought are foreign (with all of the caveats I haev in the post).

I am no right-winger, I assure you. I STRONGLY supported Hillary's health care plan, but the fact that essentially NO ONE has read these plans in full, that there are a number of highly questionable amendments built in, along with issues we have already seen on the Medicare front, makes me wary of THIS gov't being able to run a national program. There are too many concerns for me now with the bills on the table.

But I do worry at how a gov't run ins. program would work, how it would look, especially with, as I said, some of the provisions now. I certainly hope that does not make me a right-winger, but rather someone unwilling to turn over my very health without question to a gov't that has not always acted in the best interests of its citizens. Know what I mean?

Thanks for the good comment!

Rabble Rouser Reverend Amy said...

bluelyon, I'm still thinking abt your comment. Here's why I see a comparison. If the gov't was unprepared for a flood of dealer requests, it really makes me wonder abt how they will be capable of taking on millions of new insurees at once. I think that is a legitimate question to ask, as is the very real possibility of people losing their good private ins. through their employers.

Just too many unanswered questions for such an important bill that will affect ALL of us. "Just trust us" isn't going to cut it on this one.

Though I can be contrary... :-)

Anonymous said...

I still think you are comparing apples and oranges. I think the government run insurance plan can be phased in, and would not a one-time flash in the pan like this was. It can be done by (my hope) opening Medicare to all - phasing it in by first covering 50+ and then increase over time, and opening SCHIP to all children and then over time, meeting in the middle.

It really is a different scenario than cash for clunkers.

As far as buying foreign cars, we are still talking about U.S. owned dealerships with American workers who will earn money and benefit from the sale of these cars. The sales force, accounting, service departments, credit agencies, etc. Not to mention the "extras" that people with new cars will now go out and purchase such as window tinting, seat covers and steering wheel covers, stereo systems, etc. All-in-all I think this is a win and wrote about it on my blog today.

This was also a way to get gas-guzzling vehicles off the road. This is also a good thing.

These dealers will get paid. I think the only problem here was that the government was too optimistic in its capacity to "turn around" the claims within the ten day window they had imposed upon themselves.

Anonymous said...

PS - Scrapping doesn't mean unavailable for parts. It means they go to a junkyard, yes? See page 9 of the rules that which says

The CARS Act specifies that while many parts of the trade-in vehicle are permitted to be removed and sold, in the end the residual vehicle, including the engine block, must be crushed or shredded.

The crushed or shredded vehicle is then recycled. See this article which says:

That is precisely the mandate of the federal “Cash for Clunkers” program, which stipulates that trade-in vehicles must be crushed or shredded to reduce their impact on the environment.

Since Congress tripled Cash for Clunkers to $3 billion Thursday, roughly 750,000 vehicles nationwide will meet a similar fate.

The law pays dealers $50 per vehicle to disable clunker engines, a provision designed to prevent fraud.

Salvage yards like ISA haul the hulks away for free, taking their cut from the sale of scrap metals: steel, brass, copper and aluminum.

An estimated 70 percent of vehicles — which typically weigh between one and two tons — can be recycled into scrap, Spiers said.

The steel, copper, brass and aluminum from the cars will be shipped to mills to become other products.

Am I missing something here?

Rabble Rouser Reverend Amy said...

Yes, the cars are recycled in terms of primarily scrap materials, but in terms of parts available, not so much. Engine blocks, which are specifically mentioned, are seized up, rendered useless. Not everyone can afford to buy a new car. Some people actually have to keep buying used parts to jeep their vehicles running.

So, unless someone has the money to buy a new vehicle, this program is automatically limited in scope. It helps a select few, and at a fair cost to the TAXPAYER.

Well, Medicare is certainly not without its problems, bluelyon. It is far from being a perfectly run program. Extrapolate that into the entire country, and you can see there might be just a few problems. I can go into horror stories abt people denied disability, for instance, who died while claims were still pending (my cousin, for one), but I am sure you have heard them, too.

Here's the bottom line - I do not want ANY universal program rammed through when the entire bill has not been read by the people voting on it Something of this magnitude deserves time, and careful inspection, not a rush job.

There is no guarantee that all of the dealers will be reimbursed. There's only so much of taxpayer money being allocated for this. Hence why some states, like NY, pulled out of the program completely. Do you honestly think that a state the size of NY would have done that if there weren't genuine concerns abt reimbursement? Since paperwork isn't keeping up with the actual numbers, there is a very real chance that someone is going to be left out in the cold when it's all said and done.

You have been here for a long time, and you know that I was a huge supporter of Hillary's and supported her Health Care Plan. If THAT plan was being implemented, without all of the nefarious additions stowed away in the unread bill, I would feel more comfortable abt it. But it's not the same bill, and there ARE a lot of problematic additions. Hence my reticence. I hope you can understand that.

Thanks for the good dialogue!

Anonymous said...

Oh whole comment just disappeared and I've got to go to work. Try again fast, then into the shower...

1. Yeah, I'm skeptical about the "health insurance reform" (no care involved) bills being floated. The more Obama bends to the will of the corporate PTB and the whacked out rightwing, the more discouraged I get.
2. Damn straight I want the bills to be read before their voted on - all of them, just not "health care reform." And what ever happened to bills being posted online, debated on C-SPAN, etc? You and I knew that wasn't going to happen, but the sheer audacity of Obama the White House over this bill (and others) takes my breath away.
3. Go read my blog - click on Universal Health Care or Barack Obama or Feet to the Fire categories to read post after post of skepticism and flat out rejection of what is going on.
4. At the end of the day, considering how little this administration has done for the working class and local communities, I'll take this one as a win. - Per my blog, Sweetie was over at the dealership we've dealt with for years the other day and their lot was empty - courtesy of this program, so I'm grateful that everyone we know that works their has been helped and still has a job. My kid just announce to me last week that as of next Friday, she is again laid off (2x so far).
5. Nope, not everyone has been able to take advantage of this program. If you didn't have the right car, or couldn't afford a car payment, yeah, I guess that counts one out. But there are lots of programs (government or otherwise) that I'm not eligible for, but I can still see their merit.

Gotta go!

Anonymous said...

A good dialogue indeed. I can see the points in both sides of the dialogue, though I think I fall much more in RRRA's camp in terms of the health care bill.

If I can take the liberty of expounding on your apples and oranges analogy, bluelyon, I would say that the CFC bill was the apple - pretty straightforward on the inside. All you have to do is estimate the response population and multiply by $3500 or $4500 for the bulk of the anticipated cost.

The health care bill would be the orange - a mystery until you open it. How many sections? Seeds or no seeds? Stringy veins running through it ... ok, enough metaphor.

The point for me is this: If they were so significantly off base with their estimates of the response to CFC, how in the hell can they know what the health care bill is going to cost? Our economy cannot handle any more Bush-like "misunderestimations".

If they do not take the time to really figure out how it would work, what it would cost, how many would participate, etc., and just ram it through because it is #1 on the agenda, I fear the ramifications for our economy and for our health care system for that matter.

Your idea about scaling it in over time sounds great in theory (assuming they fix the probs with Medicare and SCHIP RRRA alluded to), but I have ZERO FAITH that our congress or our president will act with that much prudence.

Rabble Rouser Reverend Amy said...

bluelyon, thank you so much for your thoughtful response. I apologize for taking so long to respond. We were helping my mom move into her Assisted Living space yesterday, then had a long drive home. I particularly appreciate your RE-WRITING it (don't you hate when your comments disappear into the ether??). Thanks!

I think we're not so far off. If I had to bottom line it, I would say so much of this program felt like a PR ploy, but the demand was so SERIOUSLY underestimated, that it made it a debacle. It makes me wary when something that was supposed to be finite in scope and payment was SO way off base, just how int he world can they deal with a far, far more complex issue like our health care, especially when no one knows what the hell is in there. It is more my concerns abt this particular congress that has shown every willingness to take short cuts, to bully, to change the rules (like Kennedy is trying to do now in MA), all of that,t hat makes me skeptical. Does that make sense?

I do agree that there are many programs I support from which I, personally, do not benefit. And I am glad that there are people you know who have benefited from this.

But again, the parameters of this particular program were so narrow is to assist a very small number of people - not even half a million. At our expense. Like I said, it just seemed more like a PR ploy. See how cynical I've become? :-)

I will go to your site, too - I love your site. But it was just WAY too hard to read on my little phone, you know?

THANK YOU for your gerat conversation, bluelyon. I am really enjoying this!

And I hear you that not

Rabble Rouser Reverend Amy said...

suzy1966, thanks your your comment, too. Good analogy with the whole fruit distinction. That really helps to lay it out, I think.

I agree if there was a tier-system or something to phase in those who need health care, it would make more sense than just opening the doors, like at Macy's when they have their bridal dresses on sale. That is the image I get in my head, especially since they have proved so inept at this point.

RIGHT THIS MINUTE, they are talking on the news abt why anyone should trust the health care numbers when all of the other numbers Obama has put forth have been SO way off. That was my point from the get-go - maybe I didn't phrase it very well, but that was the point.

And now Obama has just re-nominated Ben Bernanke - because he has done so well thus far...