A Clunker of a Government Program

I write this in response to questions I’ve received about where I stand in the current health care debate. To answer that, I don’t want to talk about health care at all. Instead, I want to talk about another recent government take-over of a private industry, and the tremendous successes it is! That is, of course, the American auto industry.

Very recently, our current government officials took under their wing the inefficient and broken-down system of leadership of two of the three major car dealers. They assisted them through bankruptcy proceedings, and carefully and expertly guided them through the company rebuilding experience. At the suggestion of the President of the United States himself, the president of one of these private companies even lost his job. That doesn’t matter though, for in the end, our heroic government created two much leaner and more efficient car manufacturing businesses, one-of-which the federal government was now part-owner! Hurray!

But as part of this “trimming of the fat,” there had to be some very sorrowful cutbacks. Not at the car manufactures themselves, mind you. But at the privately-owned dealerships that day-in and day-out took the risks and made the sales of those vehicles. By order of the bankruptcy recipe, the manufactures had to cut off distributing to the people who would actually sell the cars. Why not? It makes perfect sense! Produce cars and reduce the amount of places that can sell the cars. The dealers take the risk upon themselves, and employ and sustain large parts of the tax base and economies in the cities, counties, and states that they reside. So let’s cut of their supply! It had nothing to do with the financial troubles of the car manufactures, but it had everything to do with punishing local dealers who donated more money to the Republicans rather than to the Democrats. Those folks are just going to have to sell used cars now.

Next, our the wise government leaders saw a need to boost sales for their newly-acquired properties, the auto manufactures. How best to do this? Hmmm, let’s think… Oh, I know! Let’s offer people to bring their “clunker” cars in, and we will trade them for far more money than they are worth, taking tax dollars to pay the “rebate” costs. We’ll require those people to buy a brand new car (which they might not be able to actually afford).

Now, what should we do with the “clunkers” we have collected? Oh, I know, let’s destroy them! Require that nothing be salvaged from the car – I mean, we can’t go saving save the “clunker” horn, “clunker” plastic light covers, or even the “clunker” oil cap and sell those for scraps now, can we?! The junk dealers, who make their money off of this kind of business, will just have to look elsewhere for their junk parts to sell, because the clunker parts are going to be destroyed! Oh, and no matter that many of those clunker cars still had plenty of life in them – we can’t have them resold to some teenager on the used car market. No No No No No! Can’t even let those dealers that we just cut off from selling new cars have them. Uh-uh, no sir, that would be Un-American through and through. Used cars will now have a short supply, and feature a low starting price of $4500 or more. What is that you say? People who are shopping for used cars can’t always afford $4500 – that is why they are in the used car market? No matter – they should just get a new one instead with this great program the government has provided for them!

Then the reports came in, one week into the clunker program – it was “wildly successful” and had ran out of money. The budget was one billion tax-dollars (your taxes used to help buy a new car for your neighbor), but they were out of money in one week. Now, if we accept the notion that giving away tax money to some of the people is a form of welfare, and we can gauge the success of the program as “wildly successful” because it gave away all of its money months before it was budgeted for, then what is the only appropriate response? Ram through the congress a quick bill to triple the budget of the program! And even at that, it still ran out of money two weeks earlier then forecasted! Wow! That is one wildly successful, highly-efficient government at work!

So how did the dealers feel about this voluntary program? They were kind of stuck participating. I mean, if they didn’t, the dealer down the street would, and they would lose the sale. So they had to play the game. For every car they took in on the program, they had to take the $4500 out of their own pocket to make the sale, and then turn in the paper work to be reimbursed. Some dealers were out $300,000 or more of their personal money – money they ordinarily would have used to buy more cars and restock their lot. Instead, they were waiting for the government to reimburse them. And how was that going? The government was so overwhelmed with requests for reimbursement that they were just completely caught off-guard. They didn’t have the manpower or computer server power to handle the requests. So as the program was ending, they were just about ready to catch up to the necessary staffing levels to handle it all. I stand back and marvel at the efficiency of the operation, as I’m sure the private dealers do too. It turned out that some of the dealers quit playing the clunker game several days before the program was officially to end, because they couldn’t afford to take the risk of not knowing if and when they would actually be paid. That shows the confidence they had. Personally, I just don’t understand how anyone could not have confidence in the government!

And what was the success of the program? Eight out of every ten cars were foreign made automobiles! On the bright side, that means that two out of every ten cars sold under the wildly successful cash for clunker program mean an American car rolled off the assembly line. Let’s take a minute to applaud that fact. ‘Course, as soon as it was done, business dropped like a rock, and is expected to stay low because many who bought then were planning to buy later, so they just pushed their purchase up sooner. Dealers are expecting some tough and lean times in the coming months.

So after I’ve pointed out my observations of of our current efficient government, and how they seamlessly play with and compliment the economics of the private sector, who is ready to talk about health care?