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August 21, 2009 in Nation/World
Feds curb clunker deals
Short on cash, trade-in program’s cutoff is Monday
As another worker uses a torch to remove parts from another clunker, Chip Maggio uses an excavator to crush a cash for clunkers car at his Hackensack Auto Wreckers & Repair Aug. 5 in Hackensack, N.J.
(Full-size photo)
WASHINGTON – The government, acknowledging that the cash for clunkers program was running out of money, declared it a success Thursday and killed it off as of 5 p.m. PDT Monday.
After just a week, the program, which began July 24 and was expected to last until Nov. 1, ran out of the $1 billion originally appropriated by Congress. Another $2 billion was approved two weeks ago, and it was supposed to last until Labor Day. Now that’s almost gone, too.
In his radio address on Thursday, President Barack Obama said the program, designed to stimulate auto sales and production and get gas guzzlers off the road, had “been successful beyond anybody’s imagination. And we’re now slightly victims of success because the thing happened so quick, there was so much more demand than anybody expected, that dealers were overwhelmed with applications.”
With the end in sight, many dealers are preparing for a flurry of last-minute customers over the weekend, and some are calling and e-mailing customers who were on the fence.
“It’s not clear at all if there’s enough of the $3 billion to last through the weekend,” said John McEleney, chairman of the National Automobile Dealers Association. “My concern is if we go past the $3 billion between now and Monday.” He said, however, that he had been assured that the government has done calculations to make sure there is enough money left to get through the weekend.
Dealerships have been swamped with consumers wanting to trade in their clunkers for a voucher worth up to $4,500 toward the purchase of new, more fuel-efficient vehicles. The demand set off increased production runs at General Motors, Ford and Toyota, and some factories called back laid-off workers.
The program also raised complaints from dealers that it was poorly managed because they weren’t getting reimbursed quickly for the vouchers. Car buyers complained that they weren’t able to find popular new vehicles at dealerships – on lots that only a few months ago had been overflowing with too many new cars.
Transportation officials said paperwork representing 457,000 transactions, worth about $1.9 billion – or about $4,000 on average for each trade-in – had been turned in to the government as of Thursday.
Just under 40 percent – or 170,000 – of the applications have been reviewed so far. The government has paid out about $145 million on applications that have been reviewed and approved. A large number of applications are incomplete or have inaccurate information, which means the application is sent back to the dealer to be resubmitted, according to a senior administration official who briefed reporters Thursday.
“It has been a whirlwind,” said Tammy Darvish, the Washingtonm D.C.-area director for the National Automobile Dealers Association. “It has been a lot of late nights. It’s been a lot of uncertainty with the rules. We submit paperwork and we submit. And we just keep hoping we’ll get paid. And then they end up ditching it after 30 days.”
Obama was reassuring on that score.
“I understand dealers want to get their money back as soon as possible, but the fact of the matter is this is a good-news story; they are seeing sales that they have not seen in years,” Obama said. “And they will get their money, but we’ve got to process it properly.”
He called it a “high-class problem to have – that we’re selling too many cars too quickly and there’s some backlog in the application process. It is getting fixed.”
In response to complaints, the government had said this week that it was tripling the number of employees processing claims, to 1,100. General Motors said on Thursday that it would help cash-strapped dealers waiting for clunker repayments by advancing them a 30-day interest-free loan until their rebates were processed.
Some dealers pulled out of the program earlier this week because of the reimbursement issue. Marc Cannon, a spokesman for Auto Nation, the biggest auto dealer in the country, said it is owed about $45 million from the government for the roughly 10,000 trade-ins it has taken at its 160 dealerships that are participating in the clunker program.
Obama to honor Medal of Freedom recipients 
liarsinnews on August 21 at 5:52 a.m.
Seems to me as though the Washington DC crowd is running around like a blind dog in a meat market.
Ninch on August 21 at 8:38 a.m.
So really, how is giving away money in the cash-for-clunkers program a “success” when the backlog causes dealers financial uncertainty and costs them money as they wait for their reimbursement?
In additon to “standardizing” healthcare, this is the same government that wants to take over the entire federal student loan program by making ALL loans “direct student loans” as opposed to federally guaranteed loans (Federal Family Education Loan Program-FFEL) from banks and other lenders (which since 1965 FFEL has been the primary source of student financial aid). In other words, instead of the public-private partnership of student loans spread around and administered by your local credit union, bank, or Sallie-Mae, ALL future loans (estimated to be over 12 million) would cut out these “middle men” of private lenders and be wholly administered by the feds. Obama claims this will save $90 billion or $48 billion over 10 years (depending on what day and which speech). But nowhere does Obama offer what it will cost the taxpayers to set up and implement a 100% direct loan program… which in addition to hiring more federal workers, acquiring office space and equipment, setting up new databases, etc. includes the need to borrow billions of dollars to be used for those loans. In comparison, FFEL only guarantees loans so taxpayers are on the hook for far less (defaults) then Direct Loans where taxpayers are financing the whole program. Common sense tells one that Direct Loans will add even more to budget deficits.
Most importantly, Obama also forgets the one thing that is essential in the student loan business… i.e. timeliness, responsiveness, etc… Can one imagine how backed up student loans will get when the fall semester starts… when millions of students are made to wait while the feds “catch up”… students desperately depend on those loans to pay tuition, books, living expenses but instead are met with a “processing backlog” equivalent to the cash for clunkers, i.e. 60% waiting to be processed?
Note also that with the FFEL program one has the option to switch lenders if they are unhappy with customer service/relations, whereas with the Direct Loan Program one is stuck with the bureaucratic feds (again refer to administration of the cash-for clunker program… as well as the USPS.)
Forget about socialism, Obama wants to NATiONALIZE… wants to make everything “one-size-fits-all”… wants to take away individual and community choices rather it be health care, K-12 education, student financial aid, energy, and even which vehicles to drive. Nationalism is a slippery slope as exemplified by Mussolini. Yeh, Mussolini got the trains to run on time, but look where he went from there. I will also remind everyone here that our US Constitution is based on federalism (think state rights and powers) as well as individual freedoms… NOT nationalism. Everytime someone describes Obama as a constitutional lawyer or professor and therefore is very intelligent, I cringe. Either he chooses to remain ignorant of the Constitution, or he is deliberately interpreting our founding document within his extraordinarily biased worldview.