Govt "Cash for Clunkers" program goes bankrupt in 5 days. Next: Health Care!

[Little-Acorn]

Government planning and efficiency at its best... again.

This week the Federal government proved it can't handle a straightforward payment program for people's old cars. In what may be a record, the U.S. government shut down its "Cash for Clunkers" program only five days after it started, saying they had run out of money. They started with $1 billion. It's gone.

Nex month, they intend to take over the health care industry in the U.S. (1/6 of the country's entire GDP) and run that.

Do you still think that's a good idea?

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http://wcbstv.com/consumer/cash.clunkers.success.2.1108544.html

Government Suspends 'Clunkers' Program

Jul 31, 2009

by Lou Young NEW YORK (CBS) ― "Cash for Clunkers" came to a screeching halt Thursday, after only six days on the road.

In a shocker, the government announced it would suspend the program at midnight because demand was too great.

It may have been the best $1 billion the government has spent so far this year. Business was humming at Crestmont Toyota/Volkswagen Thursday night as salespeople rushed back to work on news that the government's "Cash for Clunkers" program was being suspended. It's the deal where you get up to $4,500 for your older low mileage beast if you buy a new car with more efficient fuel consumption.

On Thursday night we learned the program was only good until midnight, all because of a backlog of red tape. So the salespeople were trying to get their deals through the government's Web site. "People are loving it. It's wonderful. It's a great stimulus package," salesman Andy Beloff said. But when asked if the government was running the program well, Beloff said, "No. No."

The dealership's lot had roughly 40 clunkers waiting to be shipped to the junkyard. Each one has already been replaced by a brand new lower mileage car. The program only started last Friday. It's a victim of its own success. But the money may be running out faster than anyone imagined. With almost 23,000 deals already processed and tens of thousands more in the pipeline, it's possible the $1 billion allocated for the program might have already run out and into the pockets of people like Christie Acosta, who knew a good deal when she saw one. "I had a 1987 Ford Explorer. We had it for a while and I was ready to get rid of it," Acosta said.

For the economy it's good news, but the government's miscalculation has some a little nervous. "These are just the deals we have to submit tonight," Crestmont president Bill Strauss said while holding a stack of papers. He said the dealership has over $100,000 on the table.

"If they can't administer a program like this, I'd be a little concerned about my health insurance," car salesman Rob Bojaryn said.


(Full text of the article can be read at the above URL)

 

[Little-Acorn]

Late news: Congress is working on a plan to resurrect the "Cash for Clunkers" program. They plan to pour more money into it, tripling its budget by borrowing an additional $2 billion and pouring it into the program.

At the present rate, that should keep it going another ten days, maybe twelve.

When government Health Care starts running out of money (ever see a government program that didn't?), what solution will Congress come up with? Will they triple that program's budget too? Or start cutting back on care (aka "rationing")? Or maybe some of both?

 

[Little-Acorn]

 

[BigRob]

Interesting editorial in the Wall Street Journal:

President Barack Obama says the program “has succeeded well beyond our expectations and all expectations.” Transportation Secretary Ray LaHood claims “this is the stimulus program that has worked better than any other stimulus program that was conceived.”

however,

First, it’s not clear that cash for clunkers actually increased sales. Edmunds.com noted recently that over 100,000 buyers put their purchases on hold waiting for the program to launch. Once consumers could start cashing in on July 24, showrooms were flooded and government servers were overwhelmed as the backlog of buyers finalized their purchases.

Secondly, on July 27, Edmunds.com published an analysis showing that in any given month 60,000 to 70,000 “clunker-like” deals happen with no government program in place. The 200,000-plus deals the government was originally prepared to fund through the program’s Nov. 1 end date were about the “natural” clunker trade-in rate.

Interesting take on the program. What do people think about it?

 

[PLC1]

Interesting editorial in the Wall Street Journal:



however,




Interesting take on the program. What do people think about it?

They must like it, if enough people took advantage of it to blow a billion in five days.

It may have been the best $1 billion the government has spent so far this year. Business was humming at Crestmont Toyota/Volkswagen Thursday night as salespeople rushed back to work on news that the government's "Cash for Clunkers" program was being suspended. It's the deal where you get up to $4,500 for your older low mileage beast if you buy a new car with more efficient fuel consumption.

Should the government try to jump start the economy by spending money that they don't have? Can the government get the economy going again by "bailouts"? Well, maybe not.

Is this program the poster child for ineffective attempts at ending the recession? Hardly.

 

[BigRob]

They must like it, if enough people took advantage of it to blow a billion in five days.



Should the government try to jump start the economy by spending money that they don't have? Can the government get the economy going again by "bailouts"? Well, maybe not.

Is this program the poster child for ineffective attempts at ending the recession? Hardly.

This does not really address the point of the editorial. His point was that the CARS program simply magnified what naturally occurred and did not really increase sales, but rather postponed the natural sales pace as people waiting for the program to begin.

If this is true, then it seems that the money spent did nothing. If its not true, then why not?

 

[PLC1]

This does not really address the point of the editorial. His point was that the CARS program simply magnified what naturally occurred and did not really increase sales, but rather postponed the natural sales pace as people waiting for the program to begin.

If this is true, then it seems that the money spent did nothing. If its not true, then why not?

My post really intended to address your last question, what did people think of the so called "cash for clunkers" program?

As for the editorial, the best way to address that would be to compare this August with last August and see whether the seasonal increase in auto sales was the cause of spikes in auto sales.

This article from Business Week gives us some clue about that question.

In announcing its monthly sales, GM chose to emphasize the fact that its August sales increased 31.3% vs. July, even though year-ago comparisons are the usual measure of success or failure. Seasonally, August sales are typically higher than July, thanks to end-of-model-year sales.

U.S. auto sales overall were down 15.5% in August from the year-ago month, to about 1.2 million. After eight months, 2008 sales were down 11.2%, to about 9.8 million. Within the August total, car sales were down 7.7%, and light trucks were off 22.1%, as consumers switched to cars to pursue better gas mileage.

Most of us remember the gas prices in the summer of '08, also.


There is likely a number of factors for the increase in sales of autos, government money being one of them.

 

[pocketfullofshells]

This does not really address the point of the editorial. His point was that the CARS program simply magnified what naturally occurred and did not really increase sales, but rather postponed the natural sales pace as people waiting for the program to begin.

If this is true, then it seems that the money spent did nothing. If its not true, then why not?

talk to sales people, and check the ads...they pushed it, and people responded. its no fluke that Ford Posted its first profits in years ...and the car most taken in the program for a new car...the ford Focus... a small fuel effecient car. thing is it was hard for people with the old cars to do much with them, auto dealers did not want them, offered very little for them, as there is no market for them to meet the huge supply of people who got them 10 years ago. while I dont sell cars right now, I had people I was selling to, that told me the where doing that deal and they had wanted to trade there SUV or what have you for some time, but had a hard time getting much for it.

regardless congrats to ford, it took no bail outs...and makes its first profit in years....and the car that helped them do it, there small fuel effecient Focus....a car I cant wait to see the new models and next generation that will be out soon...though impressed with the changes made to the old line up.

 

[ASPCA4EVER]

talk to sales people, and check the ads...they pushed it, and people responded. its no fluke that Ford Posted its first profits in years ...and the car most taken in the program for a new car...the ford Focus... a small fuel effecient car. thing is it was hard for people with the old cars to do much with them, auto dealers did not want them, offered very little for them, as there is no market for them to meet the huge supply of people who got them 10 years ago. while I dont sell cars right now, I had people I was selling to, that told me the where doing that deal and they had wanted to trade there SUV or what have you for some time, but had a hard time getting much for it.

regardless congrats to ford, it took no bail outs...and makes its first profit in years....and the car that helped them do it, there small fuel effecient Focus....a car I cant wait to see the new models and next generation that will be out soon...though impressed with the changes made to the old line up.

Part & particle of the massive amount of instant sales was due to the number of sales that the car dealers held onto knowing that this 'CASH FOR CLUNKERS' was coming down the road...{their finance mangers/general managers had been doing the necessary paper work for months prior to the news release} so once the media/news-prints were given the OK to announce there were a large number of 'INSTANT' sales that were released and processed.

Frankly I was sure hoping that more automobile dealerships would have been able to offer what Chrysler did...they doubled down on the $4,500. and it allowed new car purchases to be reduced at the $9,000. bargain rate.

DOG GONE IT...I sure needed a newer vehicle...but school contracts haven't been released yet and we are all still waiting with baited breath to see who will get the jobs that need to be filled!!!

 

[top gun]

CASH FOR CLUNKERS SHOWS HOW GOOD A GOVERNMENT PROGRAM CAN BE!!!

The government wanted to put forward a program that was a quick stimulus and also helped with gas mileage and air pollution. One official said the average fuel economy of new vehicles purchased through the program was 25.4 miles per gallon and the average fuel efficiency of the trade-ins was 15.8mpg, representing a 9.6 mpg fuel economy increase.

That's sweet as far as saving gas and less pollution but look at the HUGE BOOST TO THE ECONOMY!!!

Look at this immediate influx of cash into our economy that was just sitting on the sidelines just a few days ago.

Think of this. They've already run out of a billion dollars and 2 more billion is on the way. See how many times $4000 (the average between $3500 & $4500) goes into 3 billion. That's 750,000 new cars sold right here in America.

Now figure every car sold retails for an average of say 4 times the Cash for Clunkers rebate or $16,000 total (and this is probably a very low average cost). So take away the $4000 rebate from a $16,000 per car purchase and then times that $12,000 customer cash per car by the 750,000 brand new cars sold.

THAT'S $9,000,000,000 (NINE BILLION DOLLARS) of new customer money... not even including the rebate $3,000,000,000 that swoosh is pushed immediately into the economy and all of it is also going through probably our most struggling industry!

If the healthcare fix is even remotely close to this successful and we're in great shape!!!!!!!!!!!!

 

[Little-Acorn]

They've already run out of a billion dollars and 2 more billion is on the way.

And how will the taxpayers come up with that $3 billion to pay all these so-called "rebates"? What expenses will those taxpayers have to reduce or eliminate, to pay for them? What purchases will they have to not make?

 

[PLC1]

And how will the taxpayers come up with that $3 billion to pay all these so-called "rebates"? What expenses will those taxpayers have to reduce or eliminate, to pay for them? What purchases will they have to not make?

Since the Bush/Obama/spendthrift Congress deficit stands now at one teradollar, 3 billion represents 0.3% of that amount.

Compared to the other so called "bailouts", this one is a drop in the bucket, and it seems to be working.

So, why not reduce some of the other por... I mean bailout money by that amount? It wouldn't make much of a dent, would it?

 

[pocketfullofshells]

And how will the taxpayers come up with that $3 billion to pay all these so-called "rebates"? What expenses will those taxpayers have to reduce or eliminate, to pay for them? What purchases will they have to not make?

your econ math skills are always amazing. You think price tags on cost equal the actule cost...without factoring in anything else..

say they spend the 3 billion....and it lead to a big boost in auto sales....that lead to higher consumer confidence...and more sales for parts and other services...that equaled more profits for them as well....and this helps kick the econ back into gear a bit and results in the GDP going up, and less paid out in unemployment...and more taxes taken in with sales and income taxes.....that could mean that debt was actuly paid down on the debt. its called leverage...its like taking out a loan to start a buisness...and take out a loan...if your invest in the buisness and make 200,000 over the next 5 years...did you go in debt 100,000? or did you profit 100,000...unless you look at the whole picture....you dont know. If all I said was I got a loan for 100,000 from the bank...you dont know what effect it had on income ....same with this...that shot to the econ could reduce other cost, and increase income in other areas.