On Tuesday, the Czar said that Cash for Clunkers would prove too successful, and prove to be a major screwing of the taxpayers.
By now you have heard the program is out of money already. Keep in mind this was a one billion dollar program.
But dealerships reported that there are some great deals out there: with cash incentives from manufacturers plus the $4,500 incentive, you could get a college kid a great, low maintenance car for only a couple grand. So evidently we burned through the $1,000,000,000 in a few days. Big success, right?
Well... the NHTSA says that 22,782 cars were sold as of yesterday!
Hold on. One billion divided by 22,782? That equals $43,894.30 per car. Someone was off by a factor of almost 1000!
Can someone tell the Czarif the manufacturers get no more than $4,500 per salewhere the other $39,394.30 went?
No, counters Sen. Debbie Stabenow (D-MI), the people running the program don't know what they're talking about. She has it on good, but totally unnamed and likely nonexistent, authority that 40,000 orders were placed with 200,000 more in the pipeline. If so, that equates to $4,166.67 per car, well within the goals.
All right, two points: as anyone in sales management will ask Define your pipeline. Really, what does that mean? 40,000, she says, bought cars. 200,000 did what? Promise to buy? Place orders?
Okay, the Mandarin heard, that dealerships have about run out of qualifying new cars, and had to order lots more. That could be a plausible definition of sales pipeline, but 200,000 more?
And okay, let us say that's true: that incredibly, for the first time in history, 200,000 orders for new cars have been placed.
Why then did the House authorize additional taxpayer funding for another $2 billion? Because there is another pipeline worth an additional 480,000 more? Half a million new cars on the road?
Or is it that the NHTSA has the right amount, that $905,075,000 of taxpayer money has vanished into thin air, and something is up that we will need $2 billion more to cover the original estimate of 250,000 carswhich equates to $12,500 of taxpayer money per car sold? Minus the $4,500 incentive that goes to the manufacturers, that means at least $8,000 per car will also vanish?
General accounting office...are you reading this?