UNDERNEWS

Undernews is the online report of the Progressive Review, edited by Sam Smith, who covered Washington during all or part of one quarter of America's presidencies and edited alternative journals since 1964. The Review has been on the web since 1995. See main page for full contents

July 31, 2009

PAPERWORK CURSE STRIKES CLUNKER PLAN

We have noted before that one of the reasons the current government rescue plans are not as good as those of the New Deal is the massive increase in paperwork in our society. According to this ex-car salesman blog, you can add the clunker program to the list:

Ex-Car Salesman - I've spoken with several dealers concerning the cash for clunkers program and this video sums up the "cash for clunkers" suspension in great detail.

It is true the program is successful and will use allotted funds. But the situation is more sophisticated that that.

First, because of the popularity, there is a huge backlog of paperwork. The 20-page application requires data from various sources and in many cases takes days to complete. Dealers continue to sell cars while they wait for all the information required (e.g. insurance companies). If they continue to advance people the credit, on faith the government will refund them for destroying a car, their cash flow will soon be depleted.

Second, the CARS website where dealers submit the application cannot handle the traffic. Dealers continuously report website crashes and cannot submit their application. The only increases the amount of time dealers must wait before they receive their rebate check -- depleting cash flow.

Third, worry is building in many dealerships because many applications for the rebate are being denied after the car deal. Some on this blog have expressed outraged after dealers have called them back demanding the customer make up for the denied CARS rebate or else they would have to return the car immediately. Rebates have been denied for an untold number of reasons; including a blank field in the 20-page application.

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