Cash For Clunkers Cashes Out Already?

Turns out that Cash For Clunkers has too many clunkers and nowhere near enough cash...the program, which started July 1 (and really didn't get underway until last week on the 24th when claims could be processed) has already run through the entire $1 billion allocated to it.

The so-called "Cash for Clunkers" program will be suspended because the funds set aside for the effort are on the verge of running out, Capitol Hill sources told CNBC.

Transportation Secretary Ray LaHood has notified key senators that the program will "run out of money at midnight tonight," sources said.

That means there was only enough money in the program for about 222,222 of those max $4,500 rebates, and America apparently went through THAT number like, well, the program was going to run out of money or something. You figure some got the $3,500 rebate or less, so maybe that's 250,000 people, but that's the insane part, because yesterday, and I mean yesterday as in July 29th, the Kansas City star was reporting that only $150 million of the $1 billion had been allocated.

Consumers who want to take advantage of the cash assistance deal for new cars have to move relatively quickly and make sure they understand the rules. Help is available on the Web and on the showroom floor. The government has said it will spend the billion dollars on the program or pull the plug on it by November — whichever comes first.

Judging by the initial enthusiastic reaction, the government won’t have much trouble giving away the taxpayer funds. By Wednesday, more than $150 million had been allocated to new car buyers.

There’s already talk about a second, similar effort in 2010. However, federal officials ought to see exactly how Cash for Clunkers works out over the coming few months before renewing it.

That plug apparently is going to be pulled today, less than 24 hours after this story ran. It's out of money as of midnight. Guess consumers had to move REEEEEEEALLY quickly.

Now, either 200,000 clunkers got traded in today across the country on an average July Thursday, or something's the hell up. Yes, it's possible that the government just got around to getting all the paperwork done, but to suspend the program after just one week of claims being processed, for $850,000,000 worth of clunkers to get processed in one, maybe two days? I mean did all the paperwork just land today? All of it? To go from $150 million to the full one billion dollars in the middle of the week like that?

Naah. This stinks. Something's damn weird here. And I hope people follow up on this. This one's setting off alarms. I dunno if it's bait and switch, I dunno if it's massive fraud, I dunno if the Kansas City Star story is off by $700,000,000, or the program was just an order of magnitude too small, but something is not right.

[UPDATE 9:15 PM] The qualification list for eligible "clunkers" was changed on Tuesday by the EPA, with about 75 models delclared ineligible, and 75 other models declared eligible. I wonder what effect that had on the program.

[UPDATE 9:32 PM] MSNBC is indeed reporting that the massive backlog of unprocessed clunker deals from July 1 has prompted the government to suspend the program.

Through late Wednesday, 22,782 vehicles had been purchased through the program and nearly $96 million had been spent. But dealers raised concerns about large backlogs in the processing of the deals in the government system, prompting the suspension.

A survey of 2,000 dealers by the National Automobile Dealers Association found about 25,000 deals had not yet approved by NHTSA, or nearly 13 trades per store. It raised concerns that with about 23,000 dealers taking part in the program, auto dealers may already have surpassed the 250,000 vehicle sales funded by the $1 billion program.

"There's a significant backlog of 'cash for clunkers' deals that make us question how much funding is still available in the program," said Bailey Wood, a spokesman for the dealers association.

So, looks like my answer to my own question is answer number four...the program was way, way too small for the number of clunkers people wanted to trade in. With 13 unprocessed claims for 23,000 dealers, that's 299,000 claims, meaning the program is most likely over its limit by 49,000, plus the 22,000 already processed...a little math here shows the program could be...oh, $250 million over its limit already.

That's a major league foul-up on the part of the lawmakers who designed this one, meaning I get to add Democrat Stupidity to the Stupiditags down there: Democrat Rep. Betty Sutton of Ohio, come on down! You've made a government program that worked too well for once, so well it in fact burned itself out.

Nice.