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Clunkers without Cash:

Dealers in various states, including New York and New Mexico, have decided to withdraw from the "cash for clunkers" program due to delays in government reimbursements -- and perhaps not a moment too soon, as the Department of Transportation announced the program would end Monday (two months early) because it's again out of cash.

Melancton Smith:
Not a moment too soon. Hopefully not too much damage was done to the under-$4500 car market so that poor people can afford cars and find parts for their existing cars.
8.20.2009 10:00pm
I Callahan (mail):
Please, let's hand our health care over to these same people.

'Nuff said.
8.20.2009 10:03pm
PatHMV (mail) (www):
I'm kind of amazed, frankly, at how many dealers were willing to front $4,500 to so many customers, on the hope and expectation that the government will actually, eventually, pay them.
8.20.2009 10:03pm
Bruce Hayden (mail):
How can it be out of cash again, when it isn't paying the money it owes all these dealers?
8.20.2009 10:10pm
cirby (mail):
You know how it goes: the government allocates money for a program, so it's counted as "spent," whether or not it actually goes to the people it was allocated for...
8.20.2009 10:11pm
Toby:
The "best part" as reported by a friend of mine who owns a large dealership is that if the person who trades in a clunker owes any moeny to the Feds, the Feds withold that amount...from the reimbusement to the dealer...
8.20.2009 10:29pm
Brooks Lyman (mail):
One of the things that bothers me about this whole "Cash for Clunkers" deal is the fact that the "clunkers" turned in have to be destroyed. One might do better to make the serviceable cars available to low-income buyers at a low price. Or to send them to some third-world nation where people need cars, but can't afford new ones. Of course, the Obama administration and all the environmentally sensitive people would be horrified if we sent old, inefficient and probably polluting vehicles to some other country, totally missing the point: that if we want the people in that country to be able to buy the latest high-efficiency, low emission cars, that their economy has to be built up to the point where they can afford them.
8.20.2009 10:35pm
glangston (mail):
If the dealers are not being compensated in a timely manner and the government is claiming the dealers are filling out the claims incorrectly, it's hard to believe they could even know they were out of money.

My mechanic knows of a Lexus dealer that sold 500 cars and hasn't gotten any CASH. This also screws up their used car sales as they are not getting any in trades they can sell.

I have a buying service trying to order a new Diesel Pickup and he's unable to make contact with anyone in Chevrolet or GM dealerships that will get back to him. This CFC has overwhelmed them.
8.20.2009 11:24pm
John Moore (www):
The Cash for Clunkers deal indicates once again the disdain that environmentalists have for the poor. Many of their programs are far worse (c.f. Cap and Trade) and will directly cause deaths of third world people, and they don't care (or are in denial). The ban on DDT (which went way, way, way, way beyond any necessity) has killed 10s of millions of African children - it's an environmental holocaust, but much larger than the Nazi holocaust.

I want to have a bumper sticker that says the truth: "Environmenalism is a luxury good." Unfortunately, that doesn't make clear the serious externalities of enviro policies.
8.20.2009 11:26pm
Steve:
The talking point about the mythical DDT ban will never die. Seriously, Prof. Adler, why do you always allow that crap to pollute your threads?
8.20.2009 11:33pm
John Moore (www):
The DDT ban is far from mythical. The effects of it have been dramatic. Even today, environmental groups are trying to totally ban DDT, which would lead to more deaths.

So instead of mouthing off, why not put some facts where your mouth is, Steve?
8.21.2009 1:08am
theobromophile (www):
About five or six years ago, I heard that Massachusetts takes six to nine months to reimburse stores for bottle returns. Many stores either stopped participating in the programme or limited the number of bottle returns that they would accept form any one customer. They simply could not handle being out even $0.05 per returned bottle for that long a time.

The solution to these problems seems simple: set up programmes wherein the government is charged market-rate interest for delayed repayment. (Of course, that presumes that the government belongs in areas like using my money to help buy a $40,000 car for my neighbour - an assumption that I'm obviously unwilling to accept.)
8.21.2009 2:03am
Frater Plotter:
The DDT ban is far from mythical. [...] Even today, environmental groups are trying to totally ban DDT, which would lead to more deaths.
If it's not mythical, how can they still be trying to do it?

You know, the Mormons used to run these public-service ads on TV with moral messages. One of them had these spooky fellows singing a song about lying -- and how if you get in the habit of telling lies you'll eventually get confused and contradict yourself and everyone will discover that you're a liar.

Well, guess what? They were right!
8.21.2009 2:38am
Anon1111:

The DDT ban is far from mythical. [...] Even today, environmental groups are trying to totally ban DDT, which would lead to more deaths.

If it's not mythical, how can they still be trying to do it?

You know, the Mormons used to run these public-service ads on TV with moral messages. One of them had these spooky fellows singing a song about lying -- and how if you get in the habit of telling lies you'll eventually get confused and contradict yourself and everyone will discover that you're a liar.

Well, guess what? They were right!


Did the Mormons ever run a PSA event timelines? You know, how things can have happened in the past and also in the present?
8.21.2009 7:48am
Ben P:

I'm kind of amazed, frankly, at how many dealers were willing to front $4,500 to so many customers, on the hope and expectation that the government will actually, eventually, pay them.


"I'm kind of amazed, frankly, at the number of people who still buy T-Bills and other government bonds."

Ok, not quite the same idea, but it serves its point. The credit rating of the government is still pretty good, any by in large when the government promises to pay someone money it follows through with it. The only catch is that it's really bad with getting paperwork organized in any kind of timely manner.
8.21.2009 9:19am
Prof. S. (mail):
That's good becuase the one pocket of the government (GM) can't keep reimbursing dealers who are waiting for the other pocket of the government to finally pay up.
8.21.2009 9:26am
ronnie dobbs (mail):

I'm kind of amazed, frankly, at how many dealers were willing to front $4,500 to so many customers, on the hope and expectation that the government will actually, eventually, pay them.


I represent a large car dealer with numerous stores in the southeast. They got up to almost a $1 million in unreimbursed CFC money and then decided that they had to stop participating. And they were far from the only ones to do so. Beyond the issue of fronting the money at no interest was the fact that the program was funded with a fixed amount of money, but there was no mechanism in place to let the participating dealers know whether that pool of money had been exhausted. Now it seems that they've at least gone with a fixed deadline, which makes more sense. If this had been on Bush's watch, it would've been a "heck of a job, Brownie!" moment. Since it was Obama's baby, we'll hear about how it was a rousing success, even though they couldn't figure out the logistics for giving people free money in a timely manner.
8.21.2009 10:07am
Hannibal Lector:
The credit rating of the government is still pretty good, any by in large when the government promises to pay someone money it follows through with it. The only catch is that it's really bad with getting paperwork organized in any kind of timely manner.
My father owned and operated a small construction business all his life. After regularly winning bids with the Commonwealth of Massachusetts for the first five or six years he ran the business he stopped bidding on state projects. The commonwealth's delayed payments nearly bankrupted him.

Small businesses must buy goods and services and meet payrolls while doing business for governments. If they are not promptly paid they can be driven under by incurred expenses. Of course, Obama and his wonks and wonkettes have never made an honest living producing anything that people want, so they are incapable of understanding this or dealing with it.
8.21.2009 10:38am
Dan Weber (www):
Checking my community's Craigslist car listings, there are plenty of sub-$4500 used cars available. In a few months I could report on what one of them was like.
8.21.2009 10:49am
Fraggle Rock (mail):
"...they couldn't figure out the logistics for giving people free money in a timely manner."

I think that sums up the Obama administration nicely.
8.21.2009 10:51am
M. Gross (mail):
If it's not mythical, how can they still be trying to do it?

DDT is banned in most, but not all, countries.

I personally wonder what kind of impact the government backlog and difficulties on CFC will impact public opinion of government-run healthcare.
8.21.2009 11:07am
John Moore (www):
Exactly, DDT is banned in most countries. Furthermore, aid to poor countries is often conditioned on their abandoning the little use of DDT that is left, so they forego it.

The environmentalists are trying to get its production banned, so no country, anywhere, for any reason,can use any of it.

DDT is the most effective pesticide against malaria-carrying mosquitos, because:

1) used indoors, it is also a mosquito repellent

2) it's long half-time means a small amount is good for a long time

3) mosquitos have been less adept at developing resistance to it, so large numbers of the most dangerous mosquitos are still susceptible in most areas.
8.21.2009 12:20pm
geokstr (mail):

Bruce Hayden:
How can it be out of cash again, when it isn't paying the money it owes all these dealers?

And how can any government program ever be out of cash? What, did all the printing presses break down at the same time?
8.21.2009 1:17pm
theobromophile (www):
If it's not mythical, how can they still be trying to do it?

Frater: since people in America are still trying to get rid of drug use, we can presume that drugs are legal, right?
8.21.2009 4:41pm
Roguestage:
@John Moore et al:

DDT isn't banned in most countries. DDT use for agricultural purposes is banned in most countries, with North Korea and India the only real exceptions. DDT use for vector control - the control of insect pests - is not banned in the third world or by the 2004 Stockholm Convention on Persistent Organic Pollutants, the most recent international treaty on the subject. Source.

USAID, while it may once have conditioned aid on refusal to use DDT, no longer does so. Again, source.

Just one more source: (warning, PDF) a letter from Environmental Defense, a prominent environmental advocacy group, to USAID, asking it to allow the use of DDT to fight malaria, responding to assertions (like yours) that DDT shouldn't be used for such purposes. So much for environmental groups' efforts for a total ban. Link.

I was, however, able to find a recent report that the U.N. is trying to phase out use of DDT, but only after "five-year projects in Mexico and Central America found that non-DDT measures such as wider use of mosquito screens in homes or draining stagnant pools where mosquito larvae grow helped cut the number of malaria cases by 63 percent."

In light of all of this, I'd love to see your sources for the assertions that (1) aid to poor countries is conditioned on DDT bans, since USAID says otherwise and since DDT use for vector control is specifically allowed by the treaty, or (2) environmental groups are currently trying to enact an outright ban. The sources I was able to find with ten minutes of research seem to contradict these assertions.
8.21.2009 7:08pm
Roguestage:
Of course, that's assuming we want to get even further off topic from cash for clunkers.
8.21.2009 7:08pm
Roguestage:
Back on topic: a couple of weeks ago, I responded to one of the anti-CFC posts that it was too soon to tell whether the program was a success. It's late enough to tell now. The problems getting dealers paid means that the program is a failure, at least insofar as one goal was to help dealers clear their 2009 inventory. It's not helpful to have them clear that inventory and then be forced to wait around to get paid for it.
8.21.2009 7:20pm