Clash for Clunkers

Nathan Tabor
|
Posted: Aug 03, 2009 12:00 AM

The White House, Congress and the news media may be giving the “cash for clunkers” program high marks , but -- as with just about every government program initiated -- there are unintended consequences.

The Consumers Assistance to Recycle and Save Act of 2009 (H.R. 1550) – otherwise known as the Cash for Clunkers bill – would offer a voucher worth up to $4,500 toward a new, more fuel efficient that achieves a fuel economy rating of 18 miles per gallon or less for the old vehicle that has been insured for a year and is in "drivable condition."

Simply put, owners of old, gas-guzzling automobiles are getting more than four grand from the Feds if they trade in their clunkers for a brand new vehicle. One of the provisions of this taxpayer-funded give away is the destruction of the clunkers even if they are still functional. In other words, the government denial of $500 jalopies to young, first-time car buyers, who don't have wealthy parents, and those minimum wage workers whom liberals always claim they wish to help.

The car business is part of the trickle-down economy so vilified by progressives: A person buys a brand new car. Then within 3 to 5 years they trade it to purchase another new car. That 3 to 5 year old used car is then sold to person who wants a nice car, but doesn't want to take the hit on buying a new one. They drive it for 3 to 5 years then trade it or sell it.

That car is now 6 to 10 years old with 70k to 150k miles on the odometer. It is the perfect car for the person who doesn't have a lot of money or access to credit.

Well, thanks to Obama he is implementing a plan that will hurt the blue-collar workers, newly licensed kids, and others, who may not view the ownership of an expensive car as a priority. In addition, someone owning a 10-year old Toyota will not have to pay sky-high automobile insurance premiums since they will probably take out cheaper policies that only cover liability.

Car dealers, the people the "cash for clunkers" program was designed to help, told reporters that a lot of consumers who came into their showrooms did not fully understand the program, but that didn't stop them from taking advantage of possessing new cars with the usual chumps -- American taxpayers picking up the tab for the down payments.

On the other hand, these same dealers told these same reporters that they were concerned over whether or not the government would actually reimburse them for the discounts they gave customers. These dealers claim that they gave discounts to customers who traded in their supposed junk heaps for a big chunk of change -- between $3,500 and $4,500 -- toward the purchase of new cars and trucks.

Needless to say, the $1 billion dollars allocated for the program has already been depleted, according to new reports. Reacting to the positive reaction of the auto industry, dealers and customers, there is the promise of another billion being allocated.

Not all political leaders are enthusiastic with this government giveaway. For example, Congressman Pete Hoekstra (R-MI) believes all the hoopla over the "cash for clunkers" could be premature.

On Friday, Rep. Hoekstra heavily criticized the bureaucracy managing the "cash for clunkers" program.

"The red tape involved in ‘Cash for Clunkers’ is creating a major backlog in providing rebates to dealers and causing used cars to pile up," Hoekstra said. "If the government cannot manage a $1 billion automobile program, how can we expect it to manage a $1.5 trillion health care program?"

Hoestra's remarks followed the House's voting to include an additional $2 billion for the original $1 billion program. Much of the money has been committed, but the government has failed to pay out a vast majority of it because of the bureaucracy involved. Examples include the 21-page paperwork process, one hour to complete one form and rejections on claims for no apparent reason. The customers drive off the lot with their new vehicles while the dealers get the shaft.

"The program needs major improvement for it to work effectively," Hoekstra said. "Cash for clunkers looks good on paper, but its delivery has so far been a disaster for dealerships."

Other questions that remain unanswered includes: What happens when a customer cannot keep up his or her car payments and the monthly insurance premiums that may total $1000 per month or more. Owners of clunkers usually own them because they cannot afford to purchase, insure and maintain expensive vehicles.

Why aren't the news media asking the lawmakers and Obama such questions instead of worrying about how much more taxpayers' money they can give away?