Planet Gore

Clunkers Program Throws a Rod

Detroit, Mich. — Doug Fox is president of the Detroit Area Dealers Association and the owner of a handful of dealerships in Ann Arbor, Mich. In an interview with WJR-Radio this morning, he says he has submitted 40 Cash-for-Clunkers deals to the feds in the last three weeks and they have rejected two and approved . . . none.
Fox is not alone. While dealers have embraced a clunkers program that has brought increased business their way, they are learning that the “free” source of government funding for clunker transactions is not free of hassle.
“In apparent violation of the new cash-for-clunkers law, the Department of Transportation [DOT] is more than 10 days late in paying rebates of at least hundreds of thousands of dollars on dealer claims,” reports Automotive News. Of course, as we’ve learned from the illegal use of stimulus money for auto bailouts and the gutting of bankruptcy law in the cases of GM and Chrysler, the rule of law is not something Washington takes seriously these days.
The clunkers law signed by President Obama requires that dealers be reimbursed by the government within ten days for the $3,500 to $4,500 credits they’ve paid to customers. The DOT says it’s working through computer problems.
“Very few dealers are getting very little money,” said Bob Israel, president of the Louisiana Automobile Dealers Association. “It’s not working smoothly at all.”
David Wilson, a Toyota dealer in Orange County, Calif., has been paid for only three of 92 claims he submitted before Aug. 2, leaving him in the lurch for $374,000.
North Carolina’s Brad Wood has12 unpaid claims since Aug. 1. He’s received just $26,000 of the $319,000 in rebates he is owed. “I’ve never experienced anxiety like this in business before,” he says. “If I don’t get paid, I will have been working almost free for several months.”
National Auto Dealers Assoc. (NADA) spokesman Bailey Wood said dealers are “angry and nervous. They’re getting fed up with the program.”
And there are other problems. First, NHTSA demanded that all clunkers engines be immediately destroyed by running sodium silicate through them to satisfy green zealots that the planet-offending devils have been permanently removed from the road. But dealers got that rule changed after the first week as it became apparent that the clunkers claims wouldn’t be processed for weeks and some might be rejected — meaning they’d have to give their customers their cars back. In running order.
Fearful of these and other legal ramifications, says Michigan dealer Fox, the NADA drew up a form for all customers to sign informing them that dealers are not liable if the feds (whenever they get around to it) reject their clunker. But NHTSA — under pressure from consumer activists this time — is now instructing customers not to sign the form, leaving dealers exposed financially and causing more irritation with the program.
Many deals are also are getting rejections for procedural minutiae that they can’t straighten out because the 200 employees DOT has allocated program aren’t enough. Employees are inaccessible by phone or e-mail, NADA’s Wood says. The problem? Unlike the IRS, for example, which doesn’t audit every tax form, all clunkers applications must be reviewed. That’s 315,000 forms so far (for a staff of 200). Washington is scrambling to boost the number of employees to 1,000, but that will cost more money in a program already tight for cash.
Everybody ready for government health insurance and government-run national health connectors now?
Henry Payne is a writer and editorial cartoonist for the Detroit News.

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