Thursday, July 30, 2009

Obama's Cash For Clunkers Program; A Preview of Obama Health Care?

I am in the Auto Wholesaling business and I can tell you I knew this Cash for Clunker program would be a nightmare for the public, and also the dealers. So now the Government has suspended it and dealers are anxiously awaiting word if their deals will be funded and their submitted applications honored. Personally, this program has damaged my own income significantly. I have seen more than 50 trade-in vehicles at my dealerships that would ordinarily be wholesaled by the dealer to me and others, which we then sell to other small used car retail dealers. We make a bit of money, the dealer we sell to makes a little money when they retail these "economy" cars, the salesperson makes a little money and the lower income folks who have little or no access to financing in these extremely tightened lending times, are able to purchase a car. The car is "recycled" from one owner to someone else who needs it to get to work, or use it for work in the case of these old trucks etc. that make up the bulk of the CFC trade-ins. This program has reduced the supply of these low cost economy cars in the available marketplace, this will drive up prices that have already been very high in due to low availablility from trading in during the poor economy and low new car sales. So, in the end the little guy and the single mom with lower incomes and the least options available to them for purchasing a used vehicle will be the ones hurt. Once again the unintended consequences are not considered.

Once traded in the CFC vehicle engines must be disabled by having acid poured into the running engine until it seizes, and then an authorized salvage agent picks up the car and has it crushed. How wasteful. I have lost potentially thousands and thousands of dollars to this program and other small business people like me have as well. In Mr. Fix-It's effort to save the planet, he expends tax-payer dollars and shows just how inept the government is when they try and inject themselves into areas best left to the private sector. This program is however good for a couple of things.

1) It illustrates and proves just how vibrantly the American people and businesses are that can respond to an incentive. This further illustrates the folly of the Obama/Democrat Stimulus plan. All we needed was a 50% cut in all taxes across the board for 2 years, and ensuring that the 2010 Bush Cut expiration is extended and made permanent. This would have spurred and stimulated activity and growth and job creation by unleashing economic engines of America, Consumers and Business in the same manner as CFC program did. It would have worked without burdening our children and grandchildren with the multi-generational debt, deficits and the abject failure of the Coalition of the Clueless (Obama, Peelosi, Reid, Geithner, Frank, Biden, Waxman etc.) and their ineptitude.

2) The market will respond to consumer demand, when the consumers demand is satisfied. Hybrid vehicles have had greater purchase incentives than even the CFC program. They have all failed to provide any meaningful increase in sales. In fact, Hybrid sales are a disaster. Uncle Sam offers you $2350 Tax Credit on a 2009 Nissan Altima Hybrid. But wait, you also get a local Sales Tax rebate that is part of the stimulus program, so in the case of the Altima in Washington selling for $34,280 you would get back about $3,153 for that alone. Nissan offers up to $3,000 in Cash Rebates. So that would mean $8,503 in Govt. tax rebates/credits plus dealer incentives for the purchase of a 2009 Nissan Hybrid Altima. In honor of the recently departed Billy Mays…. BUT WAIT! There’s more! I am using MSRP for pricing these vehicles are becoming nothing more than ship anchors and I bet you could get another 3 Thousand off MSRP just to get the thing cleared off their lot. What is the point I am trying to make? Simply this, Americans will buy what they want, not what the Government wants them to buy. They still want SUV’s and Trucks, and they are buying them with or without the Cash-For-Clunkers incentive. Visit a dealer’s lot and check out their supply of Toyota Prius and any other Hybrid model. I guarantee you that you will have the best selection to chose from of any other models on their lot despite the Government offering more than double the Cash For Clunker incentive. This is why Chrysler and GM will fail as long as the Government is controlling them. Thy must make and sell what people will buy. No amounts of incentives are currently pushing Hybrids off the lots.

3) It shows how utterly incompetent, unqualified, inefficient and naive the Government is when they get involved in something best left to the private sector. If the Government can't administer a relatively simple and benign 1 Billion dollar Cash-For-Clunker trade program effectively, how and why would Americans ever let them take over the best health care system in the world and and allow Government regulation, control, and administration of something with literally life and death importance for themselves and their families? Socialized Health Care would become the largest Federal Program in history with the absolutely under-estimated initial cost of more than ONE TRILLION DOLLARS for just the initial, small-scale implementation.

This is where the rubber meets the road. Tell all of your Congressmen/women and Senators in no uncertain terms, don't you dare trade-in my health care for this " Clunker" Socialized Government Health Care Program!

Michael R. Bednarz