Thursday, August 20, 2009

Goodbye Cash for Clunkers

The Big Winner in C4C -- the Toyota Corolla!!!

The Cash for Clunkers program ends on Monday – goodbye and good riddance. Here’s yet another classic example of how the road to hell is paved with liberal “good” intentions. It further illustrates how incapable the government is at administering anything and puts particular focus on how bumbling and incompetent the Obama administration is.

The concept was supposed to be simple, a “win-win” strategy to the extent that liberals intervening in the free enterprise environment can understand such a thing. It was supposed to be a big win for the struggling auto industry and dealers by providing quick incentive for folks to buy a beautiful new fuel efficient car with the possibility of up to a $4500 rebate. It was also supposed to be an example of green thinking, doing something good for the environment, because it stipulated to get the cash, the car buyer would have to trade in a gas guzzling clunker as defined by the measure and traded in for a new car that qualifies. Traded in cars would have to be rendered immediately incapable of ever being driven again and crunched for recycling. Hey, some of these were perfectly good vehicles – fine late model SUV’s, full-sized pickup trucks, and slightly aged cars with plenty of life in them which could be great vehicles for someone to drive somewhere.

Quickly some of the public responded. In terms of buyer response, the program looked quite successful, but guess who benefitted from it the most? Not General Motors, not Chrysler – but Toyota and Honda were cleaning up as they manufacture plenty of qualifying cars almost exclusively built in the United States in right to work states with labor contracts that provide good wages but don’t bankrupt the manufacturer. Of the top selling cars in the program, only Ford had an entry. That seems like a little bit of poetic justice as they were the one domestic automaker who didn’t need the taxpayers to save their company. The most frequently traded in vehicle is the venerable Ford Explorer. The best selling car earning the rebates is the ho-hum but high quality, Toyota Corolla.

The concept started with “Consumer Assistance to Recycle" and Save Act," H.R. 2751 leading to a measure when resolved between house and senate established $1 billion to fund this program, no need to go into the specifics of what qualifies, but the Explorer/Corolla combo gives a good illustration.

If consumer response measures success Cash for Clunkers “C4C” was a big success, anxious buyers brought in their vehicles, many of which were the best kind of rides on the market, paid for, took out loans, and drove home much more politically correct vehicles. Has anyone noticed how many liberals drive imported vehicles – how’s that for supporting the American worker who they claim to represent? Dealers immediately saw an increase in buyer traffic and moved much inventory even getting some assembly lines running again. All that would look good but remember who is administering this and more importantly who is paying for this.

This is not a game where carmakers inflate their list price so they can turn around and offer outrageous rebates making gullible customers think they’re getting some kind of special deal when the selling price was going to wind up requiring the exact sized loan regardless. It’s not an accounting trick of automakers any longer. This is real money where someone picks up the tab, and that person is the American taxpayer.

Quickly, the problems arose. The budgeted billion dried up almost immediately. Congress is not good at marketing projections. Congress is not good at much of anything other than making noise and wasting money, but that’s beside the point. Dealers were promised almost immediate reimbursement, but quickly they found payments slow, applications being returned as incorrect even if they were, and all involved got nervous. Some dealers even contemplated having customers sign waivers that they would owe the rebate if the dealer didn’t get reimbursed. What kind of deal is that?

Further, part of the plan requires that cars be rendered incapable of being resold not even stripped for parts to repair other vehicles so as part of the procedure, the engine’s motor oil must be drained and then replaced with sodium silicate. The engine then must be restarted until the sodium silicate (liquid glass) seizes up the engine and totally ruins it. Egads, how could anyone start up a nice American V-8 and do that!!!

Over budget, and scrambling for more funds, the program became the embarrassment right thinking people knew it was from the beginning and now it has just been announced the program is over as of Monday, August 24, 2009 at 8:00 pm. Though limited in scale and intended to be short time, it’s yet another clear illustration of the futility of the Federal Government trying to run anything without gross mismanagement and going way over budget. Dealers are getting screwed for willingly participating only to be caught up in red-tape and incompetence getting their money back when they are already struggling financially to begin with.

The one good thing about Cash for Clunkers is that soon it will come to an end, a fate that seldom comes to any incompetent, ill-conceived, over-extended government program. The big loser is the tax payer who’s paying for this. Why should a private citizen underwrite the auto purchase of his neighbor?

The most important lesson to be learned is if the government can’t manage a small program like this, how can anyone expect them to run the health care system? The same incompetents and losers will be running that too if we don’t stop them.

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