Another lesson for ObamaCare in Cash for Clunkers

Hot Air ^ | 10 September 2009 | Ed Morrissey

[batter]

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.

[batter]

Good work by Morrissey on this.

[bigbob]

I’ll say it again - it is meaningless to talk about the C4C program without two vital pieces of information that are never given in these press releases.

#1 - How many used cars would have been traded-in regardless of whether the C4C program was in effect?

#2 - How many of the cars traded-in under C4C would have otherwise been resold?

Question #1 is obvious. If, as Edmunds.com said at one time there would be 200,000 trade-ins per month without C4C, then the only gain the program can claim is the number over that amount.

#2 is important because some “clunkers” end up in the scrap yeard or crusher, not the used-car lot. So every C4C that went this route amounds to a direct redistribution of income.

If you could lay all the facts on the table, my bet would be that the C4C sold maybe a few hundred thousand cars, some of which will not now be sold in coming months, i.e. “pre-buying” and has deprived charities and small used car dealers of potential income.

[KarlInOhio]

He corrects those numbers later in the article:

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.

[Parley Baer]

As said by a lot of people just think how government run health care will work using this program as an example.

[Pessimist]

What I would like to see is the paper trail. We’re talking about over a billion dollars here. How can that much possibly get spent on clerical stuff so quickly?

My guess would be that most of it went to political payoffs.

[WHBates]

"According to this article, though, the administrative costs to date have been $144 per rebate.

That is 3.2% overhead if the payment was $4500. I understand that most of the transaction were less which would make the cost closer to 5%. Pretty steep administration cost for just processing a payment. With these kind of admin cost I would expect the fraud in the program will be zero. LOL

[batter]

Thanks for posting that. I posted prior to Morrissey catching the error.