The Department of Transportation’s (DOT) is administering the forthcoming Cash For Clunkers (a.k.a. CARS) program. Although the program’s popularity remains to be seen, one thing’s for sure: they’re going in with their eyes wide open. “We’ve spent more time on issues involving potential fraud than anything else,” Spokesman Rae Tyson told us. “If we discover any criminal acts, we’ll hand the cases straight to the Department of Justice for immediate investigation and prosecution.” To that end, the DOT is subcontracting to an as-yet-unnamed third party for an as-yet-unspecified fee to hire an as-yet-unspecified number of “spot checkers.” Hey, you try creating and administering a federal program in 30 days. Truth be told, with just seventeen days left before CARS goes live, the DOT’s still grappling with the basics needed to protect a billion dollars in taxpayer money.
“Congress clearly intended for the vehicles [traded-in] never to be driven again,” Tyson says. “There’s still no decision on the approved method of disposal. We may go with some kind of mechanical disabling, so the parts can be recycled. Or a required change to the vehicle’s title that would prevent it from being re-registered. Or both.” Considering the possibility that the disabled, salvage-titled clunkers could still be shipped abroad (illegally), Tyson said “The crush option is still open.”
Fortunately, the DOT has some experience in these matters. “We salvage a couple of hundred crash test cars a year,” Tyson reveals. Unfortunately, even the DOT has been “stung;” two cars escaped the system—that they know about.
In any case, the new law requires that owners trading in their clunkers for a federal rebate—paid by the feds to the dealer via EFT within ten days—must have held a valid title to the vehicle for at least one year. The vehicle must be driven into the dealer under its own steam (so to speak). The owner must also have proof of insurance—although Tyson says the requirement may fall by the wayside, as not all states require proof of automotive liability insurance (exceptions: Tennessee, Wisconsin, New Hampshire, South Carolina, and Virginia).
The logistics of monitoring as many as 250,000 clunker trades (the program has a limited budget and ends November first) are daunting. Even if the DOT and DOJ manage to keep duplicity to a minimum, you have to wonder if the program could become a victim of its own success, as it has in Germany. Bureaucratic overload, market distortions, consumer fraud; CARS could lead to a multitude of unintended consequences.
“We’re talking to as many people who have experience with this kind of program as possible,” Tyson says. “But you’ve got to remember that this program didn’t even exist a month and a half ago.” Noted.
Federal penalties are a good sign – many state laws’ penalties and their enforcement mechanism – regarding car theft/title fraud are jokes. That said, fed enforcement has so much on its plate that this may be overlooked.
“The crush option is still open.”
I gotta hand it to the enviros for showing uncharacteristic emotional control & discipline on this matter by keeping quiet. This program is as environmentally friendly as fertilizing with Agent Orange.
Washington is merely performing a political kabuki of “responsibility” and “control”. The goal here is to get cars off of GM and Chrysler lots, so Government Motors can put up some green shoots sales numbers while funneling taxpayer cash to the UAW and depleted blue state coffers. Yup, this program is going to be a Success! for Team Obama, and that means the metal has to move. No trivialities such as waste, fraud, environmental inefficiency, economic illogic, negative downstream consequences, or simple pointlessness will be allowed to get in the way.
It’ll cost more than a billion dollars just to administer this program.
And how will they know when the money runs out? Will the dealers get stiffed by making deals the bill’s funds can’t cover?
“DOT is subcontracting to an as-yet-unnamed third party”
Hopefully they aren’t cutting the mercenaries of “Xe” (aka Blackwater ) loose on this one.
“Hopefully they aren’t cutting the mercenaries of “Xe” (aka Blackwater ) loose on this one.
”
I’m certain that Xe could run this scam better than the government could.
Robert,
A suggestion/fun idea not worth emailing you about: what about a pool for the best and brightest for guessing the date they feel “cash ‘fo clunkers” money runs out? The prize: bragging rights. Put me down for August 11th.
And how will they know when the money runs out? Will the dealers get stiffed by making deals the bill’s funds can’t cover?
Good question. I hope there’s some system in place to determine at least the exact date it runs out ie August 11th.
The truly important aspect of much of this “bail out” fiasco, the many aspects of it across the economy, from banks to manufacturers, is that the proper class of folks have the opportunity to perform their skimming that ensures the proper class of folks obtain the wealth they deserve.
Crunch ’em up and reincarnate them as Cruzes.
Win-win.
With all of the potential fraud, this sounds like another laughable government program. Oh well, us taxpayers will foot the bill for it.