The jury is still out on your second point. The pace that cars are selling at right now is probably unsustainable. That's the bad news. The good news is that the program is saving the summer for a lot of car dealers, who would be looking at big losses year over year during their hot season. Dealers are used to things slowing down right about when the program is set to wrap up. We'll know whether it was a success, disaster, or neither next summer when sales are supposed to speed up again. If they don't, you may be right.
As for the health care, it looks increasingly like we're looking at a set of rules coming out of Congress if anything at all... rules like, "Don't screw everyone over all the time." I can live with that.
Loc: Alexandria, VA
So let me get this right: the program is so popular that the feds can't pump out the money fast enough. Meanwhile, Ford has posted a profit and GM is rehiring.
Sounds like a complete failure to me =)
And oh noes! The program will eventually end??!! WHO KNEW??!!0000111
Well, I'll edit this to address elements of Kojak's post above (but not necessarily directed at him) -- the program was intended as a short-term stimulus to the auto industry, not a sustainable lifeline over a period of years. Obviously, it was even more popular than the government thought. If next summer sales are in the tank again, I don't really see where that impacts the success or not of the program this summer. It's going to end. Everybody knows it's going to end. If dealers/manufacturers haven't accounted for that and were expecting to suckle indefinitely at the government teat, I'm not sure the blame there lies at Obama's doorstep ...
As for healthcare reform and its relationship or not to this particular program: I can only hope that whatever healthcare reform develops is as popular and works-out as well as this has. But frankly, I have my doubts ...
I was looking for specifics of when the government is to reimburse the vouchers. This is all I found:
Page 4 Regulations: (2) establish procedures for the reimbursement of dealers participating in the Program to be made through electronic transfer of funds for the amount of the vouchers as soon as practicable but no longer than 10 days after the submission of information supporting the eligible transaction, as deemed appropriate by the Secretary;
The CNN article just says the dealers are complaining of delays. Also, "So far, about $1.5 billion of claims have been submitted by dealers who have sold a total of about 360,000 cars"
So, since the program started on July 1 they paid out of the initial $1B .. they said the funds were spent. On Thursday August 6, less than two weeks ago, the Senate voted to fund an additional $2B. Since that vote the government has issued or paid 1/4 of the new funds to reimburse vouchers.
It is my understanding from a quick read of the law (from the PDF) that vouchers are electronically issued to the dealers on complete & approved submittal of an eligible transaction.
Is the complaint from the dealers that the government has issued vouchers without funds to back them up, or that it's taking longer than 10 days to get reimbursed after the voucher is issued? Why is there a concern that they "face a growing risk that they may not be reimbursed"? There seems to be $1.5B worth of funds left in the pot and no evidence cited that vouchers are being issued beyond their funding.
When the remaining funds are depleted the government stops issuing electronic vouchers to the dealers. Where's the risk for them?
""We're sitting with $1 million out," said Jim Bee, general manager of the Toyota of Bowie dealership. He said he has taken in between 150 and 160 clunkers and has not been paid a dime from the government."
That's sounds like it's a legit problem for the dealership to be holding that debt... but nowhere does it say that his 160 clunkers were issued vouchers beyond the terms of the law. Is he claiming he hasn't been paid a dime since the program began July 1?
"But if the clunker isn't approved, we'll have to eat that $4,500." ... if the submittal isn't an eligible vehicle that's the government's fault?
... As for healthcare reform and its relationship or not to this particular program ...
I suggest that there is a relationship. Several months ago the rightwing blogosphere (Malkin) & FoxNews pundits were floating the bogus story that the Obama administration was targeting a majority of Republican-owned dealerships for closure during the GM/Chrysler restructuring. As the facts came out it seemed the reason being that actually a vast majority of dealerships were owned by Republicans. How was this determined? By comparing a control group of dealerships that weren't closed down ... with data on their recent political contibutions from the public record.
Looking at this week's poll numbers on how republicans view Obama and the democrats on all issues of the economy and healthcare, why should anyone be surprise that NADA is complaining about the (successful) clunker program that has kept them in business and profitable.
The program began July 24 and exhausted its initial $1 billion in financing in a little more than a week.
Through Wednesday, dealers have requested $1.81 billion from the program.
Also, from the complaining NY dealer: ""We're sitting with $1 million out," said Jim Bee, general manager of the Toyota of Bowie dealership. He said he has taken in between 150 and 160 clunkers and has not been paid a dime from the government."
If he's taken 160 clunkers at $4500 ea (some would only qualify for $3500), that's $720,000. How did that cost him $1 Million?
Also 160 clunkers in means he's sold 160 new cars. If the average price is $20,000 (actually It's probably closer to $26,000) after the voucher, that's $3.2 Million in new sales since July 24 ... and in this economy that's a problem?
While the average price of the new car might be $20000, the sizable majority of that goes to the manufacturer, not the dealer, on 160 new cars, he's probably looking at $80-320K. While subsidising the government until they get their paperwork together to reimburse him.
Edited by Llewelyn (08/20/0901:05 PM)
_________________________ I used to think it was terrible that life was unfair. Then I thought what if life were fair and all of the terrible things that happen came because we really deserved them? Now I take comfort in the general unfairness and hostility of the universe.
The dealership my wife works for is pretty much out of cars, they can't sell anything because they can't get cars in to sell they're going so fast.
They have had problems getting reimbursements, but there is a 30+ page rulebook and if it's not followed to the letter, there is no reimbursement. The claims that haven't been reimbursed so far were due to them screwing up, not the govt.
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