If It's Broken, Make it Bigger and Give it More Money

Sorry guys, I have to talk Cash for Clunkers (C4C) again. It came out this morning that dealers and manufacturers are giving up on the program. The problems stem from the Dept of Transportation not paying dealers for the cars traded in under the program (check out my last post on C4C for more details). So the dealers took it on faith that the government would pay them back for the $3,500 or $4,500 discount they have the consumer on the new cars. No the government mullah hasn't materialized and the dealers (who were already desperate for cash in the first place) are stuck with all this fictional cash. So GM has stepped in for some of its dealers and is providing cash advances to the dealers themselves. Let's keep in mind that GM just came out of bankruptcy on July 10th. How good of an idea is to have a company that come out from Chapter 11 protection a little over a month ago lending large sums of money to faltering dealers? It's not a good idea at all but GM has little choice in the matter, the federal government has forced the auto industry into a corner (as if they needed the government's help). Once again, lofty goals from the federal government results in downright dismal policy and implementation.










Ok, now let's move on, the program sucks, let it die. But let's not forget to learn from this (the now infamous "teaching moment", copyright Boh'Rock during the Gates incident). The government can come up with these grandiose plans with extremely noble goals (save the auto industry and decrease emissions for example) but when it comes to writing the policy to "get shit done" so to speak and finally putting that plan into action, the government is lousy, inefficient, and dog shit slow. This often exacerbates whatever problem was trying to be fixed in the first place and everyone ends up worse off.





So take the above lesson and ask yourself "After this exhibition of governmental failure to manage a relatively minor amount of money, $3 billion, do we really want to hand them the keys to the healthcare system worth MUCH more than $3B?"




I was talking to a few people about this today and I came up with an analogy that I know my parents can relate to:

Your kid wrecks a nice car worth a good amount of money that you bought him (like my first car, nice but not that fast). Do you go out and then buy him a $200,000 Lamborghini capable of 200+mph? Absolutely not.



I don't want the government crashing and burning at 200mph because, guess what, all of us are riding shotgun.
























source: http://money.cnn.com/2009/08/20/news/companies/clunkers_sales/?postversion=2009082010

Lofty Goals, Piss Poor Execution: The Story of Every Government Program

Ok, let's talk Cash for Clunkers again. Let's also put aside the arguments that I've had with countless people about the criteria and goals of said program (these points are moot now). It just came out that 2% of all clunkers claims have been paid out. (source: http://www.foxnews.com/politics/2009/08/16/auto-dealers-paid-just-percent-clunkers-claims-congressman-says/?test=latestnews) I don't care if you liked the program before, but you cannot argue with this.





Why is this you ask? Apparently there are a number of reasons but under-staffing (staff of 225 for 338,659 vehicles) and minor paperwork glitches are cited as the main causes. Isn't this typical of any government program? Hugely impressive goals coming from the mouths of politicians (they want to be remembered for having such a positive program when it comes election time) but, once the program has been met with positive poll results, the wind falls from the sails.





Now this begs the question, where is the collective $3B authorized by our "officials" to come from our pockets? According to my math (338,659 vehicles * $4,500 per vehicle to be nice and then take 2% of that), only $30,479,310 has been released to dealers. $30M out of $3B? What a terrible track record.


Now here's the real kicker. The dealers are not being paid for the cars they "sold" which means they still own the cars. This means they can take back the cars sold under the program that haven't been paid off.

The lesson to be taken from this (well one of them anyway) is that Congress should not act on their knee jerk reactions to popular opinion. For the most part, I would say the public knows best but they do not create and implement policy. It is Congress's job to take popular opinion (like "we can't afford new cars") and research if there can be policy built around it. In this case, the research was lacking in respect to funding and (I'm guessing it will come out later) the environmental impact.

So, big government, let this be a "teaching moment" (since you love that term so much). Research policy before you enact it. Better policy does not mean more policy.

Cash for Clunkers Rant

Now I know I haven't written about the CARS program (aka Cash for Clunkers) before today because I was hoping I would be wrong and it would do some good. Of course I don't agree with the government giving money to individuals to turn in their cars and buy more fuel efficient ones but I was desperately hoping something positive would come from it and I would be wrong....... too bad I wasn't.

Anyway, what everyone is talking about today is how wildly successful this program has been seeing that funds ($1 billion) were expended in 4 days (more or less). If the goal was to use that money as fast as possible, then yes it was a resounding success (too bad this is the way most people think). But really the goal was to provide a financial incentive to people who are driving older cars to turn that car in and buy a new, more fuel efficient car. An additional hope for this program was to help GM, Chrysler, and Ford move their inventory (a neat marketing trick from GM's management aka Obama).

There are two major issues with these goals the first problem being with getting the old cars off the road. It takes a lot of energy and effort to dismantle and crush a vehicle. You have to dispose of all the plastics, recycle every possible component, and dump the rest in a landfill. This entire process uses massively more energy than can be saved by a marginal increase in gas mileage. Also, let's not forget that a huge amount of energy also went into building the new car that person is going to buy (an even higher amount if it is a hybrid, the production process for hybrid batteries is grossly environmentally degrading which is why I have no respect for any hybrid driver for it shows their utter lack of intelligence or willingness to research a major investment. A real environmentalist does not drive a hybrid). So there are two huge energy usages in the creation and destruction of the cars and the trade off is a small (like 5mpg) increase in gas mileage. That does not make sense to me and what I would really like to know (and trust me, the government did not research this before they initiated this half cocked program) is how long you would have to drive a vehicle that gets 5 mpg more in order to balance out the energy costs associated with the destruction of the old vehicle and the creation of the new one?

Second major issue: helping domestic auto makers. It makes sense to me that the US government (which has a vested interest with GM) would like to keep domestic manufacturers afloat, they would like some return on investment like any investor with a pulse would. So we would expect that the numbers would show that the cars bought with money from the CARS program would mostly be made by GM, Ford, and Chrysler. Well the numbers are in!!!! But guess what, O! won't share them with us. They would rather us commit to giving them another $2 billion for a Round 2 of the program before releasing the figures (what happened to transparency?). WHO ARE YOU KIDDING? No one in their right mind would buy a car from any of those companies when their respective futures are so uncertain? Who would buy a car with a ten year warranty if the company can't promise it won't go under in the next 6 months? And let's not forget that American cars are generally sh*t anyway (some of my friends own American, sorry guys but your cars rank somewhere between gum on the bottom of my shoe and my flaking skin as a result of my latest sunburn).

This is like telling your parents that your grades are low because they don't let you stay out late enough on school nights and if they would just let you stay out until 2am instead of midnight, your grades would go up (I use metaphors because most people are too dumb to understand what I'm actually saying..... and I think I'm really clever).

So let's let this program die. The money is going to foreign companies when the intention was to keep to here. It is probably going to be detrimental to the environment in the long run. And it uses our money for it all. So please just stop.

^ Credit Nate Beeler for this cartoon. Nate, you often brighten my morning. Thanks so much.

(This was reproduced without his written or implied permission, please don't sue)

Update!!!

Here is a list of the top ten cars turned in to the government under the CARS program and it proves my point about American cars being absolute crap (I have to admit, I did love my first car to death and that was a 1997 Jeep Grand Cherokee. I still miss it today)

1. 1998 Ford Explorer
2. 1997 Ford Explorer
3. 1996 Ford Explorer
4. 1999 Ford Explorer
5. Jeep Grand Cherokee
6. Jeep Cherokee
7. 1995 Ford Explorer
8. 1994 Ford Explorer
9. 1997 Ford Windstar
10. 1999 Dodge Caravan

Here is a list of the cars bought under the CARS program. Honestly, it isn't as bad as I would have thought but it still ain't pretty.

1. Ford Focus
2. Honda Civic
3. Toyota Corolla
4. Toyota Prius
5. Ford Escape
6. Toyota Camry
7. Dodge Caliber
8. Hyundai Elantra
9. Honda Fit
10. Chevy Cobalt