Bob Franken

Cash For Clunkers: Will It Run Out of Gas


You know that typical commercial blather where Mr. or Ms. Announcer breathlessly says, “Act now, this offer is limited” or “Time is running out”? This is one of those rare times when it’s really true.

The administration and Congress are actually moving quickly because they are faced with a problem, so rare the government doesn’t quite know how to handle it: What do you do when a program actually works? So much so that it’s spent all of its money.

It’s the stimulus effort officially known as the Car Allowance Rebate System (CARS) and affectionately known as “cash for clunkers.”

Car buyers get up to $4,500 for their beat-up gas guzzler if they trade it in for a new, fuel-efficient model. The program had $1 billion to dole out. The offer was in effect until Nov. 1, or whenever the money ran out.

November 1? How about August 1?! The $1 billion is already gone. People let their pent-up demand explode. They swarmed over car dealerships (at least the ones remaining), rushing to fill out the paperwork so they could drive off in that shiny new vehicle that is still such a symbol of American success, even if it’s made by a foreign automaker.

Now the plan gets more typical of government programs. The paperwork is backed up. The official websites are crashing because they can’t handle the load. The bureaucrats are shaking their heads and saying, “Who knew?”

Quick as a flash, word came from the Department of Transportation (DOT) that the applications should stop, effective midnight last night. It’s quite possible there is no more cash for clunkers, that the program has gone kerplunk.

Even though customers began purchasing their new vehicles as of July 1, DOT had been accepting CARS applications for the subsidies only as of this past Monday. Could huge numbers of those buyers be SOL? (If you don’t know what that means, don’t ask.) The administration was scrambling for answers ASAP. Otherwise this could be a humongous SNAFU. (Never mind about that too.)

Here comes Congress to the rescue. At the urging of the White House and fully mindful that the voters will love them for it, members of the the House of Representatives quickly voted an extra two billion dollars for the program. It looks like everyone will have to hold his and her breath till next week to see if the Senate will go along. Bet on it though. Auto dealers are a potent political force to say nothing of customers with their pent up desires to get behind the wheel.

Some of those auto dealers are taking a wait-and-see approach, suspending their participation to make sure they’re not left holding the bag.

They might also be concerned about the clunkers they already have on their hands. Will they have to expand their used-car lots? Will they have to stop calling them “clunkers” and refer to them as “pre-owned”? Will the “cash for clunker” program end up being be a clunker itself, even though it’s wildly possible? Will it be still another promise that turned out to be too good to be true?

You can bet that all those battling government intervention in health care and financial regulation are already preparing their TV ads and press releases. They’ll all have the same theme: “See, we told you so.”

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