BY NCViking:

President Obama will end the so called “Cash for Clunkers” program on Monday because he says: “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.”

This is not quite accurate.

Obama was somewhat correct in his statement, but to be more accurate about his particular point – they got caught with their pants down. Of course they did, it’s the government. When a program is funded for three months, yet committed funds only last one week, there’s not just a marginal failure in forecasting, but an absolutely ridiculous one! More money was poured into the program to keep it going but it was not enough … so this clunker is going to the scrap yard. But, what Obama is failing to reveal in his “success only” analysis is that there are a few other things that are forcing this program into the metal-muncher.

The CARS program has been successful in stimulating sales and activity at dealerships, but it has also been a complete failure with execution. I was originally OK with it because I predicted that it would give the manufacturing sector a quick jolt because of its attractive consumer incentive. But like everything the government has to “administer”, it has become a complete discombobulated wreck. Earlier this week I visited a friend in Boston who provided me with a little “inside baseball” on the CARS program. He earns a living working with a wide variety of car dealerships in various capacities and offered a unique, broad perspective that was quite enlightening. My friend confirmed that the program has truly stimulated interest and sales in his industry, which is good. But endless program changes and snail-like reimbursement problems are creating fits at the dealer level and causing many of them financial hardship.

The government (Gov Co.) in its infinite wisdom has been fixing and altering the program continuously on the fly, changing the rules, confusing dealers and causing paperwork headaches. My friend told me that one dealership he calls on had to put its CFO and staff exclusively on the program to try and sift through the gov-ldygook so they could get paid. Unfortunately, they found out soon enough that it didn’t matter much since reimbursement at Gov Co. was being handled by a crew of Deputy Droop-a-longs.

While people are joyfully turning in their clunkers for a shiny new Prius, dealers have also been forced to float the $4,500 gov-incentive and wait for snail-pace reimbursement at a time when not many have the cash to do so – and it is adding up! My friend in the auto industry told me that only mega dealer groups can handle doing this, while the smaller ones are dropping out of the program en masse because Gov Co.’s ineptitude is crashing their businesses.

Here is an interesting survey from CarDealerReviews.org via GatewayPundit.com:

In a survey nearly 800 dealers,

• 97% of dealers who responded, say the government is not reimbursing fast enough
• 13% of dealers have dropped out the program because the government is not reimbursing fast enough and overall concern payment problems
• 87% percent of dealers are concerned the money will be exhausted
• 3% of CARS program deals have been reimbursed
• 66% of dealers have not received one payment from the government
• 25% of dealers are experiencing servere cash flow problems that require short-term loans to fix
• 11% of submitted applications have been approved (though dealers still are waiting for the money)
• 16% of submitted applications have been rejected
• 55% of dealers are not confident they will get reimbursed for every deal
• 40% do not want the program to continue, even if changes are made to the CARS program

All of this is from the handling of the program, not the incentive itself.

What the CARS program and the failed stimulus package have proven is that government does not have any efficient apparatus for moving money from the treasury into the economy with any sort of expediency. We needed stimulus impact for the economy in the spring and it is clear the broader effects outside of a handful of temp jobs will not be felt until well into 2010 or later. As unemployment continues to grow, and Obama and the Democrats gear up to pile on yet another big, expensive Gov Co. entitlement plan to an already busted budget, is it any wonder why the natives are getting so restless?

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