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Auto Dealers Paid for Just 2 Percent of 'Clunkers' Claims, Congressman Says

Renae

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The federal government has only reimbursed auto dealers for 2 percent of the claims they've submitted through the popular "cash for clunkers" program, a Pennsylvania congressman said, calling on the Obama administration to help speed up the process.

Rep. Joe Sestak, D-Pa., called for "immediate action" to address the problem in a statement Sunday, after writing a letter to President Obama Saturday expressing his concerns.

In the letter, Sestak said only 2 percent of claims have been paid and that four of every five applications have been "rejected for minor oversight."

In recent days, auto dealers across the country have been complaining that the reimbursement payments are slow to process. And they said some of their applications were being rejected because of apparent procedural issues. The statistics Sestak cited suggest those complaints are not based on isolated incidents.

Staffing could be one problem. According to sales data summarized by Transportation Department officials, dealers have submitted requests for rebates on 338,659 vehicles sold.

But while Congress just expanded the $1 billion program by $2 billion, the Department of Transportation says a staff of just 225 people is reviewing those claims.
Auto Dealers Paid for Just 2 Percent of 'Clunkers' Claims, Congressman Says - Political News - FOXNews.com

Cash for Clunkers is a floppage.
 
So where did the $1 Billion go?
 
The billion is prob'ly still "sitting" somewhere.

There's a reason why the words govt and red-tape go together.
I find no surprise that a govt program rejects items for procedural reasons or is slow to respond.
 
The billion is prob'ly still "sitting" somewhere.

There's a reason why the words govt and red-tape go together.
I find no surprise that a govt program rejects items for procedural reasons or is slow to respond.
Surely the government has the wherewithal to run a program like this efficiently. How hard can it be? Dealer takes car, sells new car to customer, gets cash from Uncle Sam? It's not like we're talking brain surgery here or anything.
 
They should have implemented it as a tax credit rather than a voucher. But hey, the more bureaucracy the merrier right?
 
So where did the $1 Billion go?

We are talking about the same Administration that has given 75$ billion to banks as part of the "making homes affordable act" which was suppose to help 4 million homeowners with mortgages...Instead the banks pocketed most of the money and helped only a small portion of those in need of help.
 
They should have implemented it as a tax credit rather than a voucher. But hey, the more bureaucracy the merrier right?

Questionable. The way they did it keeps $4,500 now in the pocket of the consumer while increasing demand for new cars. A tax credit would in April 2010 result in $4,500 in the pocket of the consumer. Not exactly timely. There's no disputing that the sale of new cars is significently up and up on more efficient vehicles. The real question is how long this will last.

Interestingly enough, the article does cite staffing as a concern. The same reason why the IRS has severely curtailed audits on tax evaders and the same reason why the SEC never caught Madoff. Not enough staff to the do the job well. We complain when staffing at private firms is low, why not with its the government?

Hmmm. 1,505 applications per person. Let's say they take 20 minutes to complete and mail. That's 501 hours. Divide that by 8 hour days and it's over 2 months to process them. And the number of applications are rising.

This is hardly as MrVicchio calls "a floppage." More of issues of staffing. The goal was to remove inefficient vehicles and to stimulate demand for new vehicles. Who is going to argue that it has failed there?
 
So where did the $1 Billion go?

Probably sitting in an account allocated towards rebates. I suspect they are likely allocating amounts based on raw applications and thus have run out of freely allocatable money. 338,659 applications at a bit under $3,000 a piece is $1 billion.
 
This is hardly as MrVicchio calls "a floppage." More of issues of staffing. The goal was to remove inefficient vehicles and to stimulate demand for new vehicles. Who is going to argue that it has failed there?
Whether the vehicles removed were "inefficient" in the aggregate is debatable. The gas-guzzling clunker that is paid for and only needs liability insurance may very easily be more efficient on a person's wallet than a brand new vehicle that is fuel efficient but requires full coverage (because of financing).

What the CARS program has done is brought forward new vehicle purchases--purchase that might have been made next month or next year are made today. For the immediate term, that is a benefit.

Does it address issues of demand tomorrow? No. Absent other forces raising demand, the CARS program stimulates demand for new autos today at the expense of a decline in demand after the program has run its course. A program like CARS does not produce sustainable demand on its own.

A tax credit, while slower to take effect, would have been a more longer-lasting stimulus, as it would have been a permanent downward shift in the nominal cost of a new vehicle to the tax payer.

The trade off is a larger but less sustainable stimulus today vs a slower but more sustainable stimulus tomorrow.
 
Questionable. The way they did it keeps $4,500 now in the pocket of the consumer while increasing demand for new cars. A tax credit would in April 2010 result in $4,500 in the pocket of the consumer. Not exactly timely. There's no disputing that the sale of new cars is significently up and up on more efficient vehicles. The real question is how long this will last.

It isn't the distant future either. I find it unlikely that the number of sales would be significantly different with a credit, just the timing of the sales. We're still sure to be trying to mount a recovery come April. Is it really better that the sales were in the space of a couple of weeks rather than a few months? If the money is moving as slowly this would indicate, is there even a difference at all?

Interestingly enough, the article does cite staffing as a concern. The same reason why the IRS has severely curtailed audits on tax evaders and the same reason why the SEC never caught Madoff. Not enough staff to the do the job well. We complain when staffing at private firms is low, why not with its the government?

There's no local interest and the results of proper staffing aren't very visible, only the effects of insufficient staffing are. There wasn't any political benefit to ensuring that the SEC could handle the oversight with which it was charged, so nobody did.

Hmmm. 1,505 applications per person. Let's say they take 20 minutes to complete and mail. That's 501 hours. Divide that by 8 hour days and it's over 2 months to process them. And the number of applications are rising.

This is hardly as MrVicchio calls "a floppage." More of issues of staffing. The goal was to remove inefficient vehicles and to stimulate demand for new vehicles. Who is going to argue that it has failed there?

I agree, I think the program is one of the few genuine successes that we've seen. The reason that I think it's had exceptional success is that it's the mirror image of a tax break. It's just implemented in a liberal kind of way - by spending debt directly and expanding the government bureaucracy. A lot of the right wing attacks are fun to watch because they basically argue that tax cuts don't stimulate the economy
 
The billion is prob'ly still "sitting" somewhere.

There's a reason why the words govt and red-tape go together.
I find no surprise that a govt program rejects items for procedural reasons or is slow to respond.

Today's doonesbury was actually pretty funny:

db090816.gif
 
Surely the government has the wherewithal to run a program like this efficiently. How hard can it be? Dealer takes car, sells new car to customer, gets cash from Uncle Sam? It's not like we're talking brain surgery here or anything.
Are we talking about the same USG?
I am not accustomed to hearing 'govt' and 'efficient' strung together in the same thought.
I am certainly not ruling out wrong-doing on anyone's part, but regular bureaucratic nonsense snafu shouldn't be ruled out either.
 
Whether the vehicles removed were "inefficient" in the aggregate is debatable.

Actually in aggregate they aren't, especially considering the amount of pollution necessary to build their replacements and get them to market. But that's another issue.

The gas-guzzling clunker that is paid for and only needs liability insurance may very easily be more efficient on a person's wallet than a brand new vehicle that is fuel efficient but requires full coverage (because of financing).

Be that as it may, efficiency for this program was based largely on per miles per gallon.

What the CARS program has done is brought forward new vehicle purchases--purchase that might have been made next month or next year are made today. For the immediate term, that is a benefit.

Indeed. And I'm not sure that the vehicles would have been purchased in the short term. It's rather difficult to say, unlike how Bush's bonus depreciation caused firms that were going to reinvest in equipment they needed to replace anyways did so earlier than normal. Many of the so called clunkers are working models that don't have major problems and could go for many more years. Say unlike a silicon wafer manufacturing machine that Intel replaces every 18 months.

Does it address issues of demand tomorrow? No. Absent other forces raising demand, the CARS program stimulates demand for new autos today at the expense of a decline in demand after the program has run its course. A program like CARS does not produce sustainable demand on its own.

No government funding produces sustainable demand on its own. Unless you're the Imperial Empire constantly contracting for new Star Destroyers but that's neither here nor there. However, as you stated there is clear immediate benefit, especially to companies like Ford and GM who really, really, really need the money.

A tax credit, while slower to take effect, would have been a more longer-lasting stimulus, as it would have been a permanent downward shift in the nominal cost of a new vehicle to the tax payer.

Possibly. But that would require the average consumer to fully realize the benefit of the tax credit down the line and utilize it. That's questionable given the short term memories of Americans. $4,500 in your pocket now is generally more tangible than $4,500 eight months from now. That said, there's nothing to prevent Congress from adding laws to create such a tax break. It could easily with an additional infusion of cash change it to a tax credit from a tax rebate.

The trade off is a larger but less sustainable stimulus today vs a slower but more sustainable stimulus tomorrow.

Assuming all things hold constant.
 
It isn't the distant future either.

Eight months is pretty distant when you're trying to cover the bills.

I find it unlikely that the number of sales would be significantly different with a credit, just the timing of the sales.

Possible. This is more of a psychology issue rather than economic. $4,500 now when you need the money now rather than $4,500 eight months from now does appear to most people to be two different circumstances.

Is it really better that the sales were in the space of a couple of weeks rather than a few months?

For manufacturers probably. The real issue is how long this program is going to last. If it tampers off now then there really won't be any difference. If it keeps going, then there's real potential here. As the head of the program said, it would be a real shame to end it so early.

If the money is moving as slowly this would indicate, is there even a difference at all?

That's more of a concern to the dealers rather than the consumers and manufacturers. If I was a dealer and the rebates were coming that slowly, I'd consider not doing the program. $4,500 is a lot of money to absorb per car, likely enough to put a dealer in the red per sale especially if the car is a budget stock car.

There's no local interest and the results of proper staffing aren't very visible, only the effects of insufficient staffing are. There wasn't any political benefit to ensuring that the SEC could handle the oversight with which it was charged, so nobody did.

And look where that got us?

I agree, I think the program is one of the few genuine successes that we've seen.

In terms of stimulating short term demand, yes. I never understood the Republican notion that tiny cuts can really do anything. $200? Big friggin' deal. A big honking $4,500 though is another story. But if this ends soon we'll go right back to pathetic car sales and car companies who employ people like Redress cutting back.

The reason that I think it's had exceptional success is that it's the mirror image of a tax break.

Well, more of a credit. Remember that breaks are generally deduction which are some percent.

It's just implemented in a liberal kind of way - by spending debt directly and expanding the government bureaucracy.

Well, it's kind of like Bush's bonus depreciation, only for individuals and for vehicles rather than general equipment. A reduction in corporate taxes caused by 100% increased depreciation which was financed by debt.

A lot of the right wing attacks are fun to watch because they basically argue that tax cuts don't stimulate the economy

I didn't think of it that way. That is pretty amusing.
 
It isn't the distant future either. I find it unlikely that the number of sales would be significantly different with a credit, just the timing of the sales. We're still sure to be trying to mount a recovery come April. Is it really better that the sales were in the space of a couple of weeks rather than a few months? If the money is moving as slowly this would indicate, is there even a difference at all?
Depending on the delay in payment, the program could actually end up doing more harm than good--the longer the dealership is out the funds from the CARS payments the less cash it has, and thus the more it needs to depend on credit and working capital lines, which, depending upon the health of the banks, may or may not be there.

If car dealerships wind up hurting because of non-payment of CARS credits from Uncle Sam, how stimulative has it been overall?
 
So where did the $1 Billion go?

Check out PBO's vacation package for the next couple of weeks.

What I'm axious to see, is how the gov takes it when the car dealers start wanting all these new cars back. Can anyone say, "auto dealer bailout"?
 
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In the letter, Sestak said only 2 percent of claims have been paid and that four of every five applications have been "rejected for minor oversight."




4 out of 5?


This is borderline criminal.
 
Imagine being a doctor in the United States right now.

Can you imagine trying to get paid from the government for care rendered if they can't run a simple reimbursement program for trading in cars?

This was the perfect rat test for Obamacare.
 
4 out of 5 REJECTED---wow

the money is still being printed

you know how those damn copy machines are always jamming up

that blue uniformed technician spends more time in the office than sally the secty

and this is the group that wants to assume responsibility for the physical well being of all americans

and whatever illegals are currently within our borders

as well as 16% of the us economy

turning health care over to the govt is allowing it to be operated by the kinda folks who run the dmv

and america knows it

health care is dead
 
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