According to the Wall Street Journal, the government’s “Car Allowance Rebate System” (“cash for clunkers”) program, which reimburses new car buyers up to $4500 toward the cost of a new fuel-efficient vehicle if the buyer trades in their old vehicle as part of the purchase arrangement, is in trouble:
A White House official said, “We are working tonight to assess the situation facing what is obviously an incredibly popular program. Auto dealers and consumers should have confidence that all valid [cash-for-clunker] transactions that have taken place to-date will be honored.”
Lawmakers are discussing with White House officials where to find funding — including possibly tapping the government’s Troubled Asset Relief Program, or TARP, a congressional aide said.
The clunkers program, which offers rebates of up to $4,500 to consumers who trade in old vehicles and buy new, more fuel-efficient models, began July 24 and sparked a surge in car sales.
“It was an absolute success,” said Michael J. Jackson, chief executive of AutoNation Inc., the U.S.’s largest chain of auto dealerships. “There’s a very compelling case the government should put more money into it. It’s a great stimulus to the economy.”
Congress had expected the $1 billion set aside for the rebates to last several months and set up the program to expire Nov. 1.
Obviously this was stunning to Washington DC — a “stimulus” program that actually worked, and that actually required money to be paid out to the private sector, all before 2010!
But the program turned out to be as confusing as it was popular. Rebates were made retroactive to July 1, and many car dealers began offering the $4500 credit earlier than last Friday. But the government has been slow to process dealer reimbursements, leaving them strapped for cash. Also, new EPA fuel economy ratings made 78 models that qualified for the rebates last Friday suddenly ineligible for the program this week. (At the same time, 86 more models became eligible for the program.)
Let’s see … confusion, slow reimbursements from the government, last-minute eligibility rules changes … nah, that would never happpen with government health care programs.