Counter-Revolution
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Posted on Saturday, August 1, 2009 by J. Robert Gough 
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by Flynn
Last Friday, the much-celebrated "Cash for Clunkers" program opened its doors for business. The following Thursday, the Obama Administration announced to Congress that it would "suspend" the program to "assess the situation."
Lawmakers predictably tripped over themselves to proclaim the program a success. The House, announced it planned to vote Friday to throw another $2 billion into the program. Rep. Candice Miller (R-state that used to build a lot of cars) called the program:
"simply the most stimulative $1 billion the federal government has spent during the entire economic downturn."
There two giant red flags in all this. First, it is doubtful there is anything actually stimulating going on here. In the most basic sense, to be stimulative, the program would spur transactions that wouldn't otherwise take place. Let's look at some auto sales data.
At the peak of the auto market in 2007-the year everything peaked-Americans bought up about 1.3 million autos a month. At its trough, earlier this year, Americans bought just about 750,000 cars a month. In June, the month before "Clunkers" Americans bought around 825,000 cars.
The maximum number of cars that could be sold through the como-induced Clunkers program is about 285,000. The minimum is about 220,000. These numbers aren't far off the weekly pace of sales in June, when taxpayers weren't subsidizing purchases. If you consider the very real liklihood that buyers held off purchases in July to take advantage of the Clunkers program...well, we may not have stimulated anything except a temporary boost to automakers bottom-lines. At the very least, we have simply cut automakers a check to subsidize some sales, a large majority of which probably would have taken place anyway.
The second red flag comes in the second paragraph of this story:
"...it appears to have run dry of the $1 billion allocated to it, aides said Thursday."
The quote in the article is a paraphrase...but....really? It appears to. As in, we don't really know.
Um, yes it would seem. The suspension is the result of a bureaucratic backlog. The money excerpt:
"Through late Wednesday, 22,782 vehicles had been purchased through the program and nearly $96 million had been spent. But dealers raised concerns about large backlogs in the processing of the deals in the government system, prompting talk of a possible suspension.
A survey of 2,000 dealers by the National Automobile Dealers Association found about 25,000 deals had not yet been approved by NHTSA, or nearly 13 trades per store. It raised concerns that with about 23,000 dealers taking part in the program, auto dealers may already have surpassed the 250,000 vehicle sales funded by the $1 billion program.
"There's a significant backlog of 'cash for clunkers' deals that make us question how much funding is still available in the program," said Bailey Wood, a spokesman for the dealers association."
The Obama Administration doesn't know how much it has spent in the program. It is overwhelmed by 25,000 deals not yet approved.
However stupid the "Clunkers" program, it at least was supposed to be very simple. There are only two variables. The trade in couldn't be more than 25 years old (Clunker Lite) and the new car had to have some amount of increased fuel efficiency.
It wasn't anything complicated like, say, oh, health care. Still, the feds couldn't handle it.
Maybe we could have a program to trade in inefficient bureaucrats. I have no problem subsidizing that.
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