Cash For Clunkers Runs Dry In 4 Days
The government announced this evening that the Cash For Clunkers program is fantastically successful. So successful, in fact, that the program ran through its almost $1 billion budget in four days, and has been suspended.
Part of the problem is that nobody knows how much of the program's budget has actually been spent. Dealers aren't sure how many trades they've actually completed, which is problematic considering the program's success.
The decision to suspend the plan came after auto dealers warned the government today that it was in danger of losing track of how many trades had actually been made.
The plan offering owners of old cars and trucks $3,500 or $4,500 toward a new, more efficient vehicle has proven wildly popular, with 22,782 trades certified by federal officials since Monday. But the National Highway Traffic Safety Administration told dealers Wednesday that a vast majority of transactions submitted were being rejected for incomplete or illegible paperwork.
It's nice to see a news story about record new car sales, but this is not the context in which you really want to see it.
Cash-for-clunkers program to be suspended [Detroit Free Press]
Cash for clunkers: Government stalls the CARS program [Consumer Reports Cars]
RELATED:
Cash4Clunkers Admin Responds To MPG Switcharoo, Says Nothing
EPA Tweaks Official MPGs Prior To Cash4Clunkers, Shafting Some
Don't Let Cash For Clunkers Become Cash For Con Artists
Consumer Reports Cash for clunkers hub
(Photo: Laura Northrup)
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Comments:
They're doing a bang-up job there in D.C.
I'm guessing car dealers figured out how to work this deal real quick. You can bet this benefited them a whole lot more than the consumer. Letting them administrate the deal is the biggest laugher since the fox got the keys to the henhouse.
Must of had KFC manage it.
Could've been 20 billion and I still wouldn't have been able to take advantage since I was responsible and have a 13 yr old fuel efficient car. Makes 2 federal bailout programs I can't make use of (got screwed out of). No. 2 being the 8k new home buyer credit.
@HiPwr: Let's wait to point fingers until we hear about the weak links. After all, car dealers and white-sale consumers are involved.
How does that work? 22,782 x $4,500 is approximately 100 million. Where does the other 900 million go?
Also, when you go on Cars.gov its says there is 779 million left. I don't see how they could run out of money in 4 days...
@legwork: The car dealers didn't write the legislation. The geniuses in the Capital Building did. Of course, 2/3 of them who didn't write it probably didn't even read it either because it was an EMERGENCY.
The free press article you're citing has no on the record sources (though it alludes to a lot of confusion). The program was suspended because the large number of transactions over the last 4 days has created a backlog making the system impossible to audit... and so for the time being the program is suspended. Reimbursements for clunkers are so far under the $100 million mark.
This AP article is a little less alarmist and doesn't speculate to the degree of the Free Press.
Let's see, dealers had to scan and email 15 pages of paperwork... no, there won't be any problem with that.
T@mecoolai:
The free press is stupid - as are people at the consumerist for not fact checking this article. AP is reporting that less than $100million has been redeemed and the system is being suspended to prevent a backlog in processing.
As of 7/30/2009 1710 (5:10 pm PDT) cars.gov says that there is still $779 million left for all vehicles, except for CAT3 trucks for which $75 million is left.
The list of "authorized" dealers is only a small percentage of all dealers.
I predict many many problems for consumers and dealers.
I'm reading that it's kind of a "rumor" at this point, with no official announcement of the suspension of the program... While the article is definitely shocking, I think a little more caution should be exercised at this point until there is an official announcement.
And as I read this a Chevy commercial is running on my TV advertising cash for clunkers.
@mecoolai: I was wondering that too...wouldn't somewhere around 222,000 cars receiving the full $4500 have to submit and get approved paperwork before it was out of money...
I think they should suspend the smaller amount (with the minor upgrade in fuel efficiency), and just give out the larger amount where you upgrade to a vehicle with substantially better fuel efficiency. Cut out the SUV crap too.
Our family has five cars, ALL get higher than 30 MPG. We've never owned a car that didn't get great gas mileage. Wouldn't even consider owning one. While I want to get on board with encouraging others to shop for fuel efficient cars, I don't want to pay out money if they're just getting a few measly more miles per gallon. Where's my TAX BREAK for being responsible all these years, and for passing that same value system onto my children?
(P.S. We did benefit from the housing tax break...the 7500 that needs to be repaid, not the 8000 that doesn't grrrr...We helped our recent college grad son buy a home. We're all on the deed, but because he's a first time home buyer, he qualified. We're now looking for a home with our daughter as an investment.)
Good. It was a stupid program that had absolutely no place in this sort of economy. When the economy crashes because millions of people are buying homes they can't afford, why the hell would you think it would be a good idea to SPEND MORE MONEY to encourage people to buy cars that they probably can't afford either? Slightly fuel inefficient cars are the least of our worries right now. Encouraging people to be responsible by buying used cars instead of new is the smart thing to do. To hell with the American automakers. If they can't weather this economy without government interference, they don't deserve to survive.
@mecoolai: I don't they've run out. I just think there are a lot of clunkers in the pipeline where the paperwork hasn't been completed and they're in a "hold" until they see where they are vis-a-vis the $1 billion limit.
@H3ion:
It really depends on how many miles are on her & how good the maintenance was. Perhaps there's a government rating for this?
$100 million available for the program itself. $900 million set aside for program administration.
Surprise!
Boy, that would get old after a while, throwing themed surprise parties for gov't ideas that totally didn't work out and never had a chance to do otherwise.
@dave511:
+1 You got it. So far, for being a responsible person, I have gotten squat out of all these so-called programs to help people that are, in reality, irresponsible in one way or another but end up getting assistance they shouldn't really get.
Government Fail.
Darn. I bought my car on 7/28/08, but only transferred the title to my name on 8/6/08. So I had already picked out a car and was waiting until 8/6/09 - but it looks like I missed it. Too bad, my car really is on its last legs.
and I say it again... it is wrong to give someone $4500 to go from a crappy car with 18mpg to one with 20mpg, this helps only to sell SUV/Trucks
@xrmb: Good thing they aren't doing it then. Check the chart about 1/2 way down this page. Minimum difference of 5 mpg for the full $4500 on a light duty truck. Also, don't be fooled, this is more about the economy than the environment. Car sales have been dismal for a while, this is giving them a huge boost.
@xrmb: Also, if the person has a genuine need for a vehicle that big, better to get the small improvement than to say they have to improve by 10 mpg, which would disqualfy vehicles that serve their needs, so they would keep driving the one with the worst gas mileage. Since they are often work trucks that travel more than your average car, their total gallons saved over a year might be higher than a car with a 10 mpg improvement.
@minsky: @dave511: Sometimes, being a member of society means that you may not directly benefit from every program your government puts out. Sometimes, your tax dollars go to help those less fortunate than yourselves, people who are in bad situations because of a lack of education, because of poor business decisions, or occasionally, due to a heaping, stinking pile of rotten luck. No, it's not fun, knowing that you spent responsibly and others who didn't are getting something for their folly.
It sucks, but, hey, welcome to humanity.
You may not be seeing a benefit right now, but helping someone now may very well help you in the long run. They get an affordable, safer car to drive with better gas mileage? They're able to get to work and stay off that welfare I'm sure you hate so much. They waited and are now making the leap into home ownership, shoring up tons of local businesses as well as the local economy? I'd say that's worth $8000. Their kids receive medical care (CHiP, Medicare, etc) so they can get the vaccinations they need, get the health care they need, go to the public school (so sorry you have to fund that if you have no children of your own), get the education they need, and grow up to contribute to the social security funds that will help secure your retirement? Heck, I'll take that money if you don't want it.
It can't always be Me, Me, Me. Sometimes, it's got to be Us, Us, Us. The fact that it will benefit You, You, You down the road is a nice bonus.
And the problem with this may be the paperwork is bad but the "Clunker" is already disabled with the sodium silicate in the engine(WTF!?! a lot of wasted parts that could be reused). So now what? The consumer coughs up the $4500? or the Dealer eats it since they already destroyed their trade in?
Man, I am glad I went yesterday. I barely made it.
@dave511: My Vehicle is 10 years old and meets the trade in requirement. I was not unreasonable in purchasing it as it was an SUV, and I needed an SUV for the line of work I am in.
I also did not trade it in, but could have. Please dont assume only irresponsible can benefit, I was responsible and could have benefited, but chose nott o as my car is still running very well.
and yet this makes me wonder what nationalized healthcare is going to be like. If they think forms were illegible from dealers wait until they see the chicken scratch a doctor calls handwriting :P
So much waste, all to prop up the (failing) automakers. It just makes me sick.
@bennilynn: careful, your bleeding heart is staining my copy of the US constitution. taking from those who work hard and giving it away for FREE to those who DON'T work hard is ludicrous and anathema to human nature. How DARE you suggest we take away peoples' self respect for themselves by giving them fish instead of teaching them and REQUIRING them to fish for themselves?! Your platform sucks as hard as your president.
@bennilynn: Or the less fortunate buy houses they can't afford in the foreseeable future, and default on the loans, causing a banking disaster. Then the 3 kids they had because it was essentially free money run amok, and cause havoc in the neighborhood.
I'd rather spend my money than have you and the government do it for me.
@dave511: why do you think you're getting nothing out of this? the point of the program is two-fold - get americans back to work to help rejuvenate the economy as a whole & reduce dependency on oil (which in turn should decrease oil prices overall).
surely you're not too short-sighted to see that you could reap benefits indirectly, right?
why does everyone look at this like it's a bad thing? i read lots of posts claiming failure - how exactly is this a failure? the government instituted a program that's widely popular in a very short period & it's a failure? huh? something the gov't did finally got people out there shopping. isn't this exactly what's supposed to happen?!?
sure, the suspension is a failure, but if i were in congress, the answer would be real simple: allow the program to continue & authorize an additional billion (if needed). reauthorize the program as long as it remains popular.
@bennilynn: Bennilynn I appreciate your sentiment, and I hope we can all work together toward becoming the society you describe.
But the reality is that the "system" was not set up this way in the beginning. Say what you will about predatory lending, inflated home prices, financial disparity, educational inequality, etc, the fact is that some of us--- despite the seeming disincentives to do so--- actually made responsible decisions in the first place. Now the system is changing (and I agree with you, ultimately for the better) and penalizing (yes, penalizing) those of us who knew that we could use the system to our unfair advantage but chose not to, out of fiscal responsibility and personal ethics.
Illegible paperwork? No computers were used?
@banmojo: That's not what she was talking about. I believe all of that falls under the heading of, as our 42nd President so eloquently put it, "a hand up, not a hand out." In short, while a properly running society costs money, everyone benefits, even if that benefit is not immediately seen.
Of course, if you would rather live in some libertarian dystopia, go find one and get back to me when you find one. On second thought, just get out of my sight. You sicken me. You're part of the problem anyway.
@mac-phisto: There are lots and lots of Americans who quite literally can't see past the end of their noses. I'm sure you've run across a few of these. They're the ones with the radios on from noon to 3PM getting their daily dose of BS.
@ZoeSchizzel: The SUV, as a separate vehicle class, should cease to exist. It's a station wagon, and it should be treated as a passenger car, period. But what do I know?
Let's sample a small number (though perhaps statistically significant) of dealers on weekend sales (traditionally a large percentage), see less than 10% of the money used and declare that it is all used up. Does this make sense to anyone (outside of government that is)? With all the advance publicity, an initial surge was very likely. People who were already in the market for a car, had a qualifying car and delayed their purchase until the program started. Then activity would slow as car shopping returned to more normal levels.
Cash for Clunkers...now sponsored by Chicken Little!
@mac-phisto: Perhaps it'll help restart some production lines, but I'm willing to bet that a good number of the new cars sold under this program have been sitting on lots for some time. No, I don't have hard data and I'm too lazy to look right now, just going on anecdotal evidence and observation. The vast majority of new car lots in my part of NoVA have been stuffed to their edges with unsold cars for the past few months.
As far as reducing oil consumption, the required MPG improvement per vehicle traded is so little that I doubt this program will have much effect on overall consumption. As dave511 pointed out above, this program wasn't available to people who might have made a trade that made a more substantial impact. I also discussed this situation here:
So, yes, there will be some indirect benefits to everyone but as a whole I believe the program missed the mark.
@dave511: correct me if i'm wrong, but i believe the new home buyer credit has to be repaid at some point, so it's not so much a hand out as it is an interest free loan.
@zacox: and the funny thing is people actually think the government will be able to run a more efficient, less expensive healthcare provider
This was sent to me from one of the participating salvage yards:
JUST TO LET YOU KNOW THE CASH FOR CLUNKERS PROGRAM IS A MESS NOBODY KNOWS ANYTHING AND EVERYBODY IS MAKING THEIR OWN RULES.
@craptastico: I believe that is correct.
From the IRS:
"However, the credit operates much like an interest-free loan, because it must be repaid over a 15-year period. So, for example, an eligible taxpayer who buys a home today and properly claims the maximum available credit of $7,500 on his or her 2008 federal income tax return must begin repaying the credit by including one-fifteenth of this amount, or $500, as an additional tax on his or her 2010 return."
I actually hadn't know the details about that until I looked it up. Funny how that isn't mentioned in any of the realtor's ads I've started seeing all over.
Loophole in program revealed in 5...4...3...