Cash fro Clunkers Teaching Moment.....

[Roscoe]

Another lesson for ObamaCare in Cash for Clunkers
posted at 1:37 pm on September 10, 2009 by Ed Morrissey


Last night, Barack Obama insisted that the public option would keep insurers honest by competing with them on efficiency. “[b]y avoiding some of the overhead that gets eaten up at private companies by profits, excessive administrative costs and executive salaries, [the public option] could provide a good deal for consumers,” Obama explained in defending the inclusion of the key principle for progressives in the House bill. But does the Obama administration and this Congress have a good track record on creating low-overhead federal entitlement programs? Let’s take a look at the final numbers from Cash for Clunkers (via Rob Port):

Transportation Secretary Ray LaHood says the government has approved $1.22 billion in reimbursements to car dealers for sales under the Cash for Clunkers program. …

The rebates led to more than 690,000 new car sales at a taxpayer cost of $2.88 billion.

The math on this isn’t exactly rocket science. The administration blew 58% of the C4C money on overhead, leaving only 42% for the dealers and the car buyers. It amounts to $1.36 of administrative cost for every dollar in subsidies granted, a terrible conversion price for even Obama’s idea of redistributionism.

What if the Cash for Clunkers program had been a charity rather than a government program? The Better Business Bureau would likely have classified it as a fraud. According to their guidelines, a reputable charity should spend at least 65% of their money on their charitable programs and no more than 35% on internal costs. Anything less than 65% should alert contributors that the charity does not spend its money “honestly, prudently and in accordance with statements made in fund raising appeals.”

Bear this in mind when Obama talks about the low overhead of government programs.

[computerworks]

Those pesky facts again...

Update: Rob Port has a corrected post, using data from Autoblog, which turns out to be more reliable than the AP:

Whoops, I read the article below a little too fast. The $1.22 billion number is the amount of rebates paid back so far. The remaining isn’t entirely administrative costs but also the amount of rebates yet unpaid. According to this article, though, the administrative costs to date have been $144 per rebate. That’s a lot of money for a simple car rebate, and with 690,000 rebates to process we’re talking over $100 million to process rebates for a program that lasted weeks. Still not every efficient.

That's about a 3% overhead.

[4pipes]

Ron, I'm glad you do this, I don't have the chops or the energy.

[Scott S]

A local general manager friend of mine had his agency opt out of the CFC program. As other nearby car lots sold out of qualifying vehicles he was contacted to either sell or trade for his inventory. He told me he was selling autos off his lot to other dealers at better margins than he could get from his own customers.

This last month was one of his best in a while, all from dealer sales.

Scott S

[map]

A vehicle at 15 mpg and 12,000 miles per year uses 800 gallons a year of gasoline.
A vehicle at 25 mpg and 12,000 miles per year uses 480 gallons a year.

So, the average clunker transaction will reduce US gasoline consumption by 320 gallons per year.

They claim 700,000 vehicles traded in – so that's 224 million gallons / year.
That equates to a bit over 5 million barrels of oil.
5 million barrels of oil is about ¼ of one day's US consumption.
5 million barrels of oil costs about $375 million dollars at $75 / bbl.
So, Congress just spent $3 billion to save $375 million.
How good a deal was that ?

But they're going to do a great job with health care, right?

[Excaliber]

You gotta look at the bigger picture Map, it's not just mpg. You got your blinders on to tight.

Actually I was poised to buy and the dealer opted out of the program. I never did buy anything after that. I just saw this ONE car at a VERY nice price, with or without the C4C deal. But with the C4C I would have been practically stealing it!

[map]

Originally Posted by Excaliber

You gotta look at the bigger picture Map, it's not just mpg. You got your blinders on to tight.

The Big Picture is the Tax Payer got screwed!
This was just a payback to the UAW for the 480+million of union dues the gave the Dems to get the Communist elected!
But it backfired you see most of the CFC cars bought were Non Union Built Cars..
I really think they could care less about the economy it's all about pay backs they just keep digging deeper every day. The Dems will pay for this next year and I hope most of this insanity can be reversed...

[Jamo]

Closed for Lounge Holiday.