This is topic Cash for Clunkers in forum General Comments at The Ornery American Forum.


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Posted by G2 (Member # 2942) on :
 
Great program, great story ... right? Let's check it out:
quote:
Rep. Joe Sestak, D-Pa., called for "immediate action" to address the problem in a statement Sunday, after writing a letter to President Obama Saturday expressing his concerns.

In the letter, Sestak said only 2 percent of claims have been paid and that four of every five applications have been "rejected for minor oversight."

Only 2% are approved? Seriously, WTF? Dealers have submitted requests for rebates on 338,659 vehicles. That means only 6,773 were approved. All the rest were rejected. The problem for dealers is they've already sold the new car and junked the trade-in expecting to get paid. They're out the money and the trade-in so they have no way to recover the loss except through this program and right now it looks like they'll recover about, well, 2%.

How much are the dealers out? Dealers were expecting to get reimbursed between $1,185,306,500 and $1,523,965,500. They got between $23,706,130 and $30,479,310 - over a billion dollars loss.
quote:
"Failure to address delays with the cash for clunkers program will adversely harm auto dealers in the commonwealth of Pennsylvania and around the country -- undoubtedly forcing many out of business," he [Sestak] said in a statement.
Gee, ya think? I, for one, am shocked - shocked - that a government program does not deliver on it's promises. First time evah! Heh.

The reality is the dealers cannot sustain a billion dollar plus loss, they have to be getting into a cash flow situation soon. Sestak is correct that this will force dealers out of business and probably sooner rather than later. To Sestak's credit, he sent a letter to President Obama Saturday expressing his concerns. Way to drop the hammer there Joe! Something will undoubtedly happen real soon now™. Those dealers can rest easy. Yeah.

Speaking of the money, this program apparently ran out of it a couple of weeks ago. It started with $1 billion, paid out at most $30,479,310 and it was reportedly broke. Consequently it was given another $2 billion. What happened to the remaining $970 million in that original $1 billion? Did they still have it? Then why the need for more? The auditors assigned to oversee this program will no doubt ... wait, auditors ... hmmm. Exactly what oversight was put in place to oversee the disbursement of $3 billion dollars? I looked around and can't find it but maybe I just missed it, it happens. Anybody got a link to show how this money is monitored?

But don't anybody panic, these exact same people got that health care thing all figured out. Fo sheezy!
 
Posted by threads (Member # 5091) on :
 
Are there any more details on why the claims were rejected? Also, if you quote an article then you should link to it.
 
Posted by aupton15 (Member # 1771) on :
 
Indeed. Inquiring minds want to know more than two snippets ;-)
 
Posted by sfallmann (Member # 2148) on :
 
http://www.foxnews.com/politics/2009/08/16/auto-dealers-paid-just-percent-clunkers-claims-congressman-says/?loomia_ow=t0:s0:a16:g12:r1:c0.729362:b27199488:z0

Here's a link.
 
Posted by G2 (Member # 2942) on :
 
Applications were "rejected for minor oversight." Whatever that means.
 
Posted by Wayward Son (Member # 210) on :
 
So the dealers are going to resubmit the applications, right?
 
Posted by JoshCrow (Member # 6048) on :
 
Some more info:

Baltimore Sun

quote:

As of last week, Maryland dealers had submitted claims for $34.4 million in reimbursements.

But few of those dollars have made their way back to Maryland.

"It's getting to the point where we can't keep sustaining this thing," said Peter Kitzmiller, president of the Maryland Automobile Dealers Association. "We can't afford to keep putting out money."

The regulations called for dealers to be reimbursed in seven to 10 days, Kitzmiller said. "That certainly hasn't been the case."

The Maryland dealers association surveyed 300 members last week about the program. Among the 70 respondents so far, fewer than 2 percent of claims for reimbursement have been paid. Nine percent had been rejected, while another 9 percent were approved but not yet paid.

Kitzmiller said the government owes some dealers hundreds of thousands of dollars and even millions.

Government officials say part of the problem is that dealers submit incomplete claims, which in turn cause delays.

Federal officials told auto associations last week that the government was assigning an extra 1,000 workers to process claims, Kitzmiller said. Dealers would be relieved if they started seeing an increase in the pace of reimbursements this week, he said.

Sounds like they seriously understaffed this effort... but then, one can more or less count on the government to be a little slow to let go of money.
 
Posted by G2 (Member # 2942) on :
 
I assume they would - I'd resubmit the hell out of them. With a initial success rate of 2%, I'd be pretty worried though. With the processing time, which is apparently lengthy and error prone (I guess that's what minor oversight is), how long can the dealers float over $1 billion in debt? A month? Two? Maybe 3? I dunno but I bet their cash flow ain't all that great as it is and taking this big a bite out of it can't help.
 
Posted by G2 (Member # 2942) on :
 
Even more on the success of this program:
quote:
The popular program is being blamed for hurting charities that rely on donations of cars to fund social programs.

Those charities say their donations have fallen up to 12-percent already since “Cash for Clunkers” was implemented.

They fear that as time goes on, their annual donations will drop 25-percent, which amounts to more than 100-million dollars.

Wow, everybody wins!
 
Posted by JoshCrow (Member # 6048) on :
 
... although it wouldn't surprise me if the social programs would have ended up supporting all the auto-workers and dealers who would have been unemployed without the Cash for Clunkers effect of pushing car sales. [Wink]

G2, you have to admit, for all its problems the program HAS been an important boon to the auto-industry in a time where it was suffering miserably. If you're going to point out the problems, you should also note the successes.

[ August 18, 2009, 03:41 PM: Message edited by: JoshCrow ]
 
Posted by G2 (Member # 2942) on :
 
quote:
Originally posted by JoshCrow:
G2, you have to admit, for all its problems the program HAS been an important boon to the auto-industry in a time where it was suffering miserably. If you're going to point out the problems, you should also note the successes.

But is this a real success? It has been successful in creating an artificial demand - people who normally would not have purchased a car right now have done so. That does create a short term spike in sales but it is only sustainable as long as the program remains to support it. Once this program goes away, the sales will plummet back to real demand. If this is any success at all, it's a very short term one and one the auto makers cannot plan on lasting unless they plan on government subsidy in perpetuity.

What about those car dealers and their cash flow? It hasn't been much of a success for them and if things don't get ironed out quick, fast and in a hurry then it could be bankruptcy for more than a few of them.
 
Posted by Dave at Work (Member # 1906) on :
 
It certainly has driven up sales in the time period that it has been in place. I see two shoes that could drop here though.

The first is what G2 started this thread about. Will the dealerships be left holding the bag, so to speak, on a significant number of these transactions? How many of these dealerships might face significant financial harm or even bankruptcy if this happens? I don't think that the dealerships will be all that thankful for the short term boom in business if it means they go out of business because of it.

The second is how much of this recent boom in business is due to people timeshifting their next automobile purchase? How many people decided to buy a vehicle now instead of 6 months or a year from now to take advantage of the CARS program? If that number is significant, will that translate into reduced car sales at some point in the future? In short how many car sales were actually generated that would not have happened within the next year or two anyways?
 
Posted by Pyrtolin (Member # 2638) on :
 
quote:
Originally posted by Dave at Work:
The second is how much of this recent boom in business is due to people timeshifting their next automobile purchase? How many people decided to buy a vehicle now instead of 6 months or a year from now to take advantage of the CARS program? If that number is significant, will that translate into reduced car sales at some point in the future? In short how many car sales were actually generated that would not have happened within the next year or two anyways?

Which is countered by the question that since production is being stepped up again and people are making more money, how many car (and other) purchases that would not have happened at all will now happen because more people are making money and thus can spend it on such things? Also how many people, due to savings on fuel will now be more able to make other purchases and put money in the pockets of other workers?

The boost doesn't have to last forever, just until baseline economic health recovers enough to meet it and begin to push it up naturally.
 
Posted by Funean (Member # 2345) on :
 
Well, there's nothing inherently wrong with inspiring people to make a purchase earlier than they might otherwise have. That's what "sales" are all about. Sales address a cash flow issue for businesses by enabling them to move existing merchandise (ie an already sunk cost) and receive actual slightly fewer dollars now, as opposed to potential slightly more dollars later.

Sales only address future revenue insofar as they may create satisfied customers who will remember the retailer for a later purchase and inasmuch as they may keep the buiness from going under now, thus effectively preventing future revenue. So I think the "whaddabout six months from now, eh?" argument is not germane.

With regards to the question of whether the guvmint should be in the business of drumming up business for car companies, well, the guvmint is a pretty big shareholder in those companies at the moment.

I think the environmental angle is pure marketing, as the net effect is probably not significant, especially since there's no way of knowing whether the program will result in a net fewer gallons guzzled (if you drive more because your car is cheaper to fuel, you're not reducing emissions). And, as long as we're supporting an industry, I'd have preferred the program to provide an incentive for US companies or at least cars built in the US.

Overall I think the net effect is not worth the paperwork involved.
 
Posted by G2 (Member # 2942) on :
 
quote:
Originally posted by Pyrtolin:
quote:
Originally posted by Dave at Work:
The second is how much of this recent boom in business is due to people timeshifting their next automobile purchase? How many people decided to buy a vehicle now instead of 6 months or a year from now to take advantage of the CARS program? If that number is significant, will that translate into reduced car sales at some point in the future? In short how many car sales were actually generated that would not have happened within the next year or two anyways?

Which is countered by the question that since production is being stepped up again and people are making more money, how many car (and other) purchases that would not have happened at all will now happen because more people are making money and thus can spend it on such things? Also how many people, due to savings on fuel will now be more able to make other purchases and put money in the pockets of other workers?

The boost doesn't have to last forever, just until baseline economic health recovers enough to meet it and begin to push it up naturally.

More people are making money? Unemployment is still rising, wages are falling. Fewer people are making money now than have been in quite a long time (except for Soros of course). Production may be stepping up but it's in response to an artificial demand due to the time shifting of a purchase decision. There will be significant slack in this at some point.

And whatever fuel savings they get are more than offset by the car payment by a very, very long ways. It won't even be close.
 
Posted by Greg Davidson (Member # 3377) on :
 
Cash for clunkers convinced me to make a purchase that I would have put off for years. We got rid of a 94 Mercury Villager and bought a 2010 Toyota Corolla (the first new car I have ever got to drive for myself). We're financially strained right now with two kids in college (and had to take the 3rd one out of private school to pay for the first two). But with a $4500 gov't credit and $1,000 in manufacturer's rebates from Toyota, we were able to get a Corolla for $12,600 (and $1200 of that went to California sales taxes). It meant that I fully researched tapping into my 401(k) as our contingency money if there's any major unexpected expenditure or loss of income.

So the federal government put up $4500 and encouraged me to take a risk I otherwise would not have, thus leveraging their stimulus money by 3 to 1.

By the way, we picked a Toyota because of the list of 8 cars I was interested in, it had the highest domestic content.
 
Posted by Greg Davidson (Member # 3377) on :
 
Oh, and the reason why I didn't put that money into Zakkai's private school instead was that $12,600 isn't nearly enough (it is the most perfect high school I could imagine, but the cost is astronomical)
 
Posted by Pyrtolin (Member # 2638) on :
 
quote:
Originally posted by G2:
More people are making money? Unemployment is still rising, wages are falling. Fewer people are making money now than have been in quite a long time (except for Soros of course). Production may be stepping up but it's in response to an artificial demand due to the time shifting of a purchase decision. There will be significant slack in this at some point.

The rate at which unemployment is increasing is very clearly slowing and every new job that is made available helps contribute to a positive feedback reaction that helps pull back against the negative feedback created by additional layoffs. Short another disaster or a repeat of 1936, we're rounding the bottom of the dip now. Unemployment will have peaked by the end of the year, and we'll be seeing some amount of growth by early next year. Every extra job that can be created, even for a little while, helps pull us back toward growth because it helps get money flowing properly again.
 
Posted by G2 (Member # 2942) on :
 
The fallout is starting:
quote:
Hundreds of auto dealers in the New York area have withdrawn from the government's Cash for Clunkers program, citing delays in getting reimbursed by the government, a dealership group said Wednesday.

The Greater New York Automobile Dealers Association, which represents dealerships in the New York metro area, said about half its 425 members have left the program because they cannot afford to offer more rebates. They're also worried about getting repaid.

"(The government) needs to move the system forward and they need to start paying these dealers," said Mark Schienberg, the group's president. "This is a cash-dependent business."

<snip>

Many dealers have said they are worried they won't get repaid at all, while others have waited so long to get reimbursed they don't have the cash to fund any more rebates, Schienberg said.

Transportation Secretary Ray LaHood says the dealers will get paid, presumably that will happen real soon now. However, as Schienberg says, it's a cash dependent business and right now they ain't getting the cash.

As of this morning, dealers have made clunkers deals worth $1.81 billion and been reimbursed about $36 million - around $1.5 billion in cash has flown out of dealerships and there is growing fear they won't get it back despite LaHood's assurance so the dealers are starting to get out of the program.
 
Posted by Wayward Son (Member # 210) on :
 
So, G2, once this payment delay is taken care of and the dealers get their money and everybody is happy, what will be the point of this thread? [Wink] [Smile]
 
Posted by G2 (Member # 2942) on :
 
So, Wayward Son, when will it be taken care of and the dealers get their money?
 
Posted by LoverOfJoy (Member # 157) on :
 
quote:
So, G2, once this payment delay is taken care of and the dealers get their money and everybody is happy, what will be the point of this thread?
To stand as an omen of how effective the government will be with their health care plan.

Oh wait...

quote:
once this payment delay is taken care of and the dealers get their money and everybody is happy ...
To serve as fuel to try to melt the ice that froze over in hell? [Wink]
 
Posted by Wayward Son (Member # 210) on :
 
quote:
So, Wayward Son, when will it be taken care of and the dealers get their money?
Criswell predicts....

pretty soon. [Smile]
 
Posted by Gina (Member # 6372) on :
 
quote:
Originally posted by Wayward Son:
So, G2, once this payment delay is taken care of and the dealers get their money and everybody is happy, what will be the point of this thread? [Wink] [Smile]

To point out that the whole thing is ill-conceived, not to mention poorly constructed and administered, like every other government program. Destroying perfectly usable cars which would have been sold to lower-income people or donated to charity, simply for the ideological whims and crony payoffs of the Democrats. Sort of like the FDR administration destroying food supplies during the Depression in order to prop up price controls, even though people were going hungry. Why give a man a fish when you can teach him to be a slave to the welfare state?
 
Posted by Greg Davidson (Member # 3377) on :
 
Gina, you are wrong.

Goal of the program = economic stimulus and reduction in carbon emissions.

Effect of the program = economic stimulus and reduction in carbon emissions.

Why are you an advocate for a deeper depression and more pollution?
 
Posted by RickyB (Member # 1464) on :
 
"Sort of like the FDR administration destroying food supplies during the Depression in order to prop up price controls, even though people were going hungry."

I love this. The good protestants shrug when people go hungry, leaving it to private charity to maybe save them, but then accuses the other side - the one that made sure as many people as possible DON'T go hungry - of starving children.

Sort of like how they pin the brief recession of 1937-38 - the one caused by FDR BACKING OFF from New Deal policies in order to listen to the business sector and balance the budget - as proof that "the new deal didn't work."

"Why are you an advocate for a deeper depression and more pollution?"

Um, not to engage in motive speculation, but the common answer to that is "cause it pisses off the godless libruls."
 
Posted by G2 (Member # 2942) on :
 
quote:
Originally posted by Wayward Son:
quote:
So, Wayward Son, when will it be taken care of and the dealers get their money?
Criswell predicts....

pretty soon. [Smile]

Yeah, that really helps when you've laid out over a billion dollars and need that payment. It almost certainly will pay someday. Will the car dealers be able to float their business and cash flow until someday?

This thing is developing too, the National Automobile Dealers Association in Washington, D.C., released a survey of its members that estimated they have submitted claims for nearly $3.3 billion. So what's wrong with that picture? The Cash for Clunkers program is only authorized to spend $3 billion - about $300 million short and counting.

quote:
Originally posted by Gina:
quote:
Originally posted by Wayward Son:
So, G2, once this payment delay is taken care of and the dealers get their money and everybody is happy, what will be the point of this thread? [Wink] [Smile]

To point out that the whole thing is ill-conceived, not to mention poorly constructed and administered, like every other government program.
Exactly. This is a very simple program working within a well defined frameset with a very small subset of the population. And they can't get it right.

It's an administrative nightmare, has run out of money twice now and currently has cost more than twice its original estimate - and will no doubt run over even more. This is the perfect example of government programs and, as I pointed out in my original post, the same people that will run health care. If they can't get a mind numbingly simple program like this right, what makes anyone think they will get the extremely complex and massive health care takeover right?

quote:
Originally posted by Greg Davidson:
Gina, you are wrong.

Goal of the program = economic stimulus and reduction in carbon emissions.

Effect of the program = economic stimulus and reduction in carbon emissions.

Why are you an advocate for a deeper depression and more pollution?

Greg, you are wrong.

Goal of the program = economic stimulus and reduction in carbon emissions.

Effect of the program = poor people and charities lose the opportunity for good cars.

Why are you an advocate for keeping poor people poor and destroying charitable organizations?

[ August 20, 2009, 09:15 AM: Message edited by: G2 ]
 
Posted by TomDavidson (Member # 99) on :
 
quote:
To point out that the whole thing is ill-conceived, not to mention poorly constructed and administered, like every other government program.
Hyperbole much?
 
Posted by Wayward Son (Member # 210) on :
 
quote:
If they can't get a mind numbingly simple program like this right, what makes anyone think they will get the extremely complex and massive health care takeover right?
And what I'm trying to point out is that there is an obvious flaw in this conclusion, one which should be obvious to even the most disinterested observer:

The program hasn't failed yet.

Yes, there are bumps in the road. It's not going as smoothly as it should. And if the money doesn't get moving soon, it could cause real problems. But it hasn't reached that point yet. And it may never get there.

Because of a severe lack of any real failures in the Obama Administration, you are forced to create them. You have to anticipate disaster at every turn, because, so far, there hasn't been any real disasters. This is partly because the Obama Administration has been in charge for a little over 6 months, so they haven't had the chance to fail in a major way. I'm sure, given time, they will fail spectactually, just like every Administration before them.

But you can't wait, can you?

"Nattering nabobs of negativism" is how William Safire (for Spiro Agnew) put it. Of course, many of them were right at the time, and you may be right, too. But you don't know that, now. And crowing about how Obama has failed even before he has is the height of arrogance. And will make you look truly foolish if the program actually succeeds.

I predict that it will. I believe that, once the problems are smoothed out, the money will flow into the hands of the dealers and all of this brouhaha will be forgotten. Yes, some charities will have less income, and some poor people will have more expensive transportation (if they can afford it). But--gee whiz!--nothing is perfect. Someone always loses when there is a change. But ultimately, the program will do what it was intended to do, as Greg pointed out: stimulate the economy and reduce carbon emissions.

I also predict that you will not acknowledge this success. There will be some imperfection, some small problem, that you will point to and declare that this proves it was a total failure. Because that, it seems, is your real point in this thread. To prove that Obama is a complete and utter failure, unworthy to be President, and thoroughly incompetent. And you will keep harping on this idea until the day he leaves office.

Regardless of whether there evidence of this or not.
 
Posted by G2 (Member # 2942) on :
 
quote:
Originally posted by Wayward Son:
quote:
If they can't get a mind numbingly simple program like this right, what makes anyone think they will get the extremely complex and massive health care takeover right?
And what I'm trying to point out is that there is an obvious flaw in this conclusion, one which should be obvious to even the most disinterested observer:

The program hasn't failed yet.

Under that definition of failure, no program would ever fail because it just keeps going. Sure, just keep pumping billions into it. Like every other program. Government never fails because you define failure as ending the program.

quote:
Originally posted by Wayward Son:
Because of a severe lack of any real failures in the Obama Administration, you are forced to create them.

You must listen solely to NPR or something.
 
Posted by Wayward Son (Member # 210) on :
 
quote:
Under that definition of failure, no program would ever fail because it just keeps going. Sure, just keep pumping billions into it. Like every other program. Government never fails because you define failure as ending the program.
Except this is a limited program. It all ready has ended. The dealers are just waiting to get paid.

How can you say it will "just keep going?" [Confused]

quote:
You must listen solely to NPR or something.
Primarily, but that is beside the point. If there are so many obvious failures, why are we talking about a program that hasn't failed yet as a failure?? Why predict disasters when there are so many other disasters to point to?
 
Posted by JoshCrow (Member # 6048) on :
 
Wayward, I think it's worth noting that G2 has never shown an interest in weighing pros and cons of any government program created by Obama. He's never posted anything positive about anything Obama has done, and nobody expects him to, because he has put on a red shirt and sees that the other guy is wearing blue and that is the extent of his interest in the discussion.
 
Posted by hobsen (Member # 2923) on :
 
JoshCrow, that generalization about G2 strikes me as probably wrong, and certainly inflammatory. After all, if G2 once wrote he liked a shirt Obama wore, that alone would refute it. Are you sure he has never written anything like that?
 
Posted by JoshCrow (Member # 6048) on :
 
hobsen - although my comment was perhaps abrasive, I think G2 will in fact agree with me that he has never posted anything (of substance) that portrays Obama positively, nor is it his tendency to post a pros vs. cons argument about Obama programs. It may well be that he thinks Obama is simply that bad, or it may be his desire in posting negative threads to balance a perceived favoring of Obama by others, but this is to speculate on motives - my post was only meant to suggest that based on his posting record, G2 is unlikely to be moved by the kind of argument such as Wayward has put forward.

If G2 feels like I'm mischaracterizing his posting record, he's welcome to show me that I'm wrong.
As you suggest, he need only point to a past post (and I'm not referring to backhanded remarks or sarcastic praise here). I would, in fact, welcome being wrong on it.

[ August 20, 2009, 05:06 PM: Message edited by: JoshCrow ]
 
Posted by FiredrakeRAGE (Member # 1224) on :
 
One item that was not (I think) brought up so far - what about all of the used parts shops and junkyards? They're paid to destroy the car and to salvage (recycle) the materials. This has two detrimental aspects:

(1) It means that in the future used cars will be more expensive, and used parts will be more scarce. This could affect used auto sellers and auto parts companies.

(2) It means that only those companies that are large enough to meet the Federal requirement for the CARS program will be considered for disposal of these used cars. Combine that with the lack of cheap used parts, and you'll see many smaller used parts places go out of business.

This will result in more new car sales/production, which is the goal of the program. That said, it seems a little two-faced to argue that carbon-based trade caps are great, and to argue that new car production (vs. the use of used cars) is a good thing.

That said, this program *is* stimulating to car dealerships. It has a whole bunch of good and bad side effects -- none of which, I'm sure, were considered by the folks in Washington.
 
Posted by Mariner (Member # 1618) on :
 
Goal of the program = economic stimulus and reduction in carbon emissions.

Effect of the program = economic stimulus and reduction in carbon emissions.


Greg, I question the effectiveness of both of those goals.

First of all, let's look at the environmental side. Initial inputs in manufacturing have a large part to play in the life cycle of cars. So with C4C, you might have bought a car 10 years ago, bought one now, and use the new one for 15 years. That averages out to 12.5 years of driving per car, so the emissions from making the car(s) are spread out across that time. Without C4C, you might put off buying a new car until 5 years in the future, in which case the new car emissions are spread out over 15 years. That could make a huge difference.

Next, you have to consider future technology. If you buy a car now instead of 5 years from now, you are stuck with the MPG of your current car. What you don't know is the MPG of your future car. Suppose breakthroughs in PEVs occur in the next 5 years? Your two options here are:
40mpg car for 15 years, 300mpg care for the rest of your life
15mpg car for 5 years, 300mpg car for the rest of your life.
If you drive 12000 miles per year, the second option actually saves fuel

Finally, while LCA studies generally use the functional unit of CO2/mile, that may not actually be the best standard. This is because people in more fuel efficient cars tend to drive more than people in less fuel efficient cars. Here is one study on this phenomenon, for example. So yes, you'll still directly saving CO2 emissions if you drive 16000 miles in a 40mpg car vs 12000 in a 15mpg car, but it's less savings then what you initially expect. And that may allow the two other considerations above to win out.

Obviously there's not enough information for either of us to come to a definite conclusion about whether or not C4C is reducing CO2 emissions. But these things do call into question your assertion, and I don't think you can be 100% sure about it.

Now, as for the "stimulate the economy" bit:

This is the basic "broken window" fallacy. This is saying that something which undoubtedly decreases wealth, such as breaking windows or destroying cars, can improve the economy. But it's ignoring all the indirect effects. Consider:

- This undoubtedly hurts people on the lower end of the wealth spectrum, as it raises the costs of used cars. Since these people can't afford new cars, they may be stuck. Or they're forced to sacrifice other spending in order to buy new cars. Or maybe upper-middle class parents won't buy their teens going off to college a car, as they're too expensive. Thus the teen is stuck on campus and unable to spend money on worthless trivolities, thereby depressing the local economy. Etc., etc.

Secondly, and more importantly, it ignores the opportunity cost of what to do with C4C money in the first place. This is especially true for the second round of C4C funds. The money was stripped from the energy loan guarantee funds. What does this mean? It means it'll be harder for new alternate energy projects to be funded. These are the sort of projects that are the first ones cut during a credit crunch like this recession. After all, they're unproven technology, and therefore high risk. Personally, I know over a dozen biofuel companies who have dramatically slowed down their commercialization plans after the big crunch last year. These people would love loan guarantees in order to star putting cement on the ground and get their projects running.

At worst, these loan guarantees would be no less stimulating than C4C, as any company that fails is no different than blowing up cars. In fact, in the grand scheme of things, its better, as every failed company tells everyone else what not to do, and thus increases the odds for everyone else. At best, these loan guarantees would be a real stimulus, helping to form stable, long term companies that generate wealth and provide dozens of direct jobs without government funding.

Given the loss of 2 billion dollars of loan guarantees here, I think it's safe to say that C4C has failed in stimulating the economy.

[ August 20, 2009, 08:24 PM: Message edited by: Mariner ]
 
Posted by Greg Davidson (Member # 3377) on :
 
Dear Mariner,
first, I am very pleased to respond to an informed and reasonable critique of what I said - it's quite refreshing, so thank you.

Environmentally, this is complex (as there is a heavy carbon footprint for manufacturing a car, and in fact the batteries for electric or hybrid-electric cars impose an additional carbon burden that it takes several years to amortize). Nevertheless, I believe that this will have a generally beneficial impact on reducing the growth of carbon emissions because it gets higher polluting cars off the road immediately. I'd accept an argument that the effect will be not be large (this is probably not the best investment if reducing our carbon footprint and dependence on foreign oil are the primary objectives)

quote:
Secondly, and more importantly, it ignores the opportunity cost of what to do with C4C money in the first place.
With respect to the economic impact, I believe we have a difference of opinion because I have a different opinion of what is the root cause of the current economic crisis. I believe that the economy can be subject to a lack of aggregate demand. In a time of economic crisis, such as 1929 or 2008, entrepreneurs see the dramatic reductions in economic activity (and the value of financial assets), and they respond not by investing in newly inexpensive opportunities, but rather by hoarding liquid assets so as to be able to survive if things get worse. This was part of the credit freeze that we faced last Fall. And there is a cascade effect - as businesses become fearful about the future, they cut back on production. Their suppliers -- seeing future orders -- cut back on production, which results in higher unemployment(and both the newly unemployed and those fearful of being unemployed will spend less money, which businesses see, leading them to cut back production even further). Every turn of the cycle leads to less demand for goods and services, which is what I referred to as inadequate aggregate demand. In 1929 when the government took no action, the spiral continued until 1933.

If inadequate aggregate demand is the problem, you need government to stimulate demand to create new orders. Direct government investment addresses inadequate aggregate demand, but something like C4C is even more efficient because each $1 of government funding leverages $3 or more of private stimulus. I used C4C and bought one of the cheapest possible cars in the program, and it still got me to pay $12,600 to stimulate the economy (in addition to the government's $4,500) - for people who bought a more expensive car the program was even more successful.


PS: I'd like to pretend I invented this view of the world, but it's directly from John Maynard Keynes (not to be confused with the so-called "Keynesian" economic theory which differs in some significant ways).
 
Posted by G2 (Member # 2942) on :
 
quote:
Originally posted by Wayward Son:
So, G2, once this payment delay is taken care of and the dealers get their money and everybody is happy, what will be the point of this thread? [Wink] [Smile]

As I said yesterday, the National Automobile Dealers Association in Washington, D.C., released a survey of its members that estimated they have submitted claims for nearly $3.3 billion. Over the weekend, we can be pretty sure more will be submitted. The problem is:
quote:
The Obama administration will end the popular $3 billion Cash for Clunkers program on Monday, giving car shoppers a few more days to take advantage of big government incentives.

<snip>

... the administration needed to put a halt to the program to avoid surpassing the $3 billion funding level.

Do you still think the dealers will get their money and everybody will be happy? [Wink] [Smile]

[ August 21, 2009, 10:20 AM: Message edited by: G2 ]
 
Posted by Wayward Son (Member # 210) on :
 
quote:
Do you still think the dealers will get their money and everybody will be happy?
Yes. [Smile]

I have faith in this program because no one involved wants it to fail. The car companies love it; the dealers love it (once they get paid); and the car buyers love it. And with all those big hitters loving it, Congress and the President love it.

The only ones who are hurting are junk yard owners, certain charities (who saw one of their sources of income curtailed), and the small-government advocates who can't stand to see any government spending at all. (Where were they for the past 8 years, I ask you?)

With all those people wanting to see the program succeed, it most likely will succeed. I heard yesterday that one of the major auto manufacturers--GM, I think--said they would front the rebate money to the dealers until the government gets around to paying them off. So there shouldn't be many bankruptcies of car dealers, if any.

But keep telling us how this program has failed, G2. We'll all be fascinated to see how you try to justify that later. [Smile]
 
Posted by G2 (Member # 2942) on :
 
quote:
Originally posted by Wayward Son:
quote:
Do you still think the dealers will get their money and everybody will be happy?
The only ones who are hurting are junk yard owners, certain charities (who saw one of their sources of income curtailed), and the small-government advocates who can't stand to see any government spending at all. (Where were they for the past 8 years, I ask you?)
They were screaming but ignored. Don't confuse Republicans for small-government advocates.
quote:
Originally posted by Wayward Son:
[QUOTE]
With all those people wanting to see the program succeed, it most likely will succeed. I heard yesterday that one of the major auto manufacturers--GM, I think--said they would front the rebate money to the dealers until the government gets around to paying them off. So there shouldn't be many bankruptcies of car dealers, if any.

The government is holding the line on a $3 billion dollar cap - which had already been exceeded. Now you're telling me another government entity, GM, will funnel money to dealers? Where does it end you think? If that happens, we'll never know how much was spent on it. I guess if there's only a few bankruptcies, that's a success?

quote:
Originally posted by Wayward Son:
[QUOTE]
But keep telling us how this program has failed, G2. We'll all be fascinated to see how you try to justify that later. [Smile]

But keep telling us how this program has succeeded, Wayward Son. [Smile]
 
Posted by edgmatt (Member # 6449) on :
 
The program can both succeed and fail at the same time. It has caused some positive effect...those crappy cars are off the road. That was a success. Unfortunately it is going to be at the expense of car dealerships. It is not surprising to see a government entity be slow on doing what it claims it will do. That is par for the course, and just something people need to start accepting about government run programs...they aren't efficiently run. If the government does in fact hold the line at $3B, then that will be one part of this program that has failed.
 
Posted by Greg Davidson (Member # 3377) on :
 
Before you come down too hard on government efficiency in this case, remember the challenge of creating a financial processing organization in a very limited amount of time (had to receive the law as passed, then it required administrative determinations on the rules that were only firmed up in late July, then you need to have hired employees, trained them in the protocols, coordinate with thousands of dealers, accept a much higher volume of reimbursements that the originally planned $1B over 4 months in a short period of time, etc.)
 
Posted by Greg Davidson (Member # 3377) on :
 
I thought of a better way to characterize the environmental benefit of this program.

We went from an 18 mpg vehicle to a 28 mpg vehicle. To make the math simpler, let's imagine the new car was only 27 mpg. That means that for every 270 miles I drive, I will now be using 10 gallons of gas instead of 15 gallons - that's a 1/3 reduction in gas used, which both reduces pollution and cuts our dependence on foreign oil. And in reality, because my aging 1994 Mercury Villager was getting much less than the advertised 18 mpg, and because my new car will certainly be getting its 28 mpg, the impact is even larger.
 
Posted by edgmatt (Member # 6449) on :
 
It is all those challenges that make the government less efficient at doing this sort of thing. It's the nature of that system. You have a bunch of people who really have no incentive to get this job done at its utmost efficiency because they do not stand to benefit from it. Add the rules, regulations, double checks, red tape up the wazzoo and you get delay, confusion, mis-communication, etc etc. That's the government. I realize this seems like I'm rolling my eyes at them, but I'm really just accepting that this is what is to be expected when you put bureaucrats in charge of someone else's finances.

Granted there are some positive effects of all this, you listed some. It doesn't mean it was an overall success (or failure). The cost of these positive effects, though, might be greater than the benefits. Particularly to certain car dealerships.
 
Posted by Gina (Member # 6372) on :
 
quote:
Originally posted by edgmatt:
It is all those challenges that make the government less efficient at doing this sort of thing. It's the nature of that system. You have a bunch of people who really have no incentive to get this job done at its utmost efficiency because they do not stand to benefit from it. Add the rules, regulations, double checks, red tape up the wazzoo and you get delay, confusion, mis-communication, etc etc. That's the government. I realize this seems like I'm rolling my eyes at them, but I'm really just accepting that this is what is to be expected when you put bureaucrats in charge of someone else's finances.

This is what I see in government purchasing. Granted, big corporations also are byzantine, but government goes that extra special mile. There's no flexibility for people to act as human beings with common sense. A government purchase order is 20 pages of gobbledygook, and invoice copies have to go to person A, B, C, and D in a particular order. Don't get it out of order, or you won't get paid. Invert one digit or leave one off on a req number or PO number or department number, and you start the whole process over again. "But can't you just correct it without us having to re-issue a new invoice?" No. And on and on. That is even IF you can get a person on the phone to answer your question, because they're on union hours and one department doesn't know what the other is doing or who is in charge of what.

Part of this is the culture, part of it is that they really are bound by a gazillion regulations and cannot just go to the boss and ask, "can we do this a little differently in order to get this done?"

It is, as you say, the nature of the beast.
 
Posted by Greg Davidson (Member # 3377) on :
 
edgmatt and Gina, I believe that your characterizations are a bit too broad. I have worked both in government and private industry, and I would have to say that there are places where government workers are tremendously innovative* and places where corporate workers are hopelessly bureaucratic. My understanding is that Medicare is generally more responsive to consumers than most health insurance companies, and Medicare spends much less for their services than insurance companies.

That being said, government organizations often do have constraints that make them less effective. In many bureaucracies, particularly in government, when you have a public problem, there is political pressure to put on a "band-aid" solution. Then when the next problem comes, another band-aid solution is put on. Pretty soon, the entire patient is covered with band-aids (ie; many little fixes each designed to address a problem, but when aggregated together they create a nightmare of paperwork).


* I worked with Frank Cepollina, a government employee at NASA, on the first servicing mission of the Hubble Space Telescope. "Cepi" is the most entrepreneurial person I have ever met. In the 1970's he believed that titanium would be the strategic material for the future, so he bartered his way into collecting 10% of the world's supply of titanium (when they found out, they made him give it back). When we were planning for the first servicing mission and new boxes on orbit needed to be replaced, he'd go to his team who were working 70 hour weeks and get them to add a new task to figure out a way to get more replacement parts up in orbit. One of our joint efforts was on ways to contribute to the economic development from space research, so he was talking with power companies to use microchannel plate detectors developed for space astronomy on-board helicopters to detect power line leakages. When you talk about government workers, you are also talking about Cepi.
 
Posted by Gina (Member # 6372) on :
 
quote:
Originally posted by G2:
They were screaming but ignored. Don't confuse Republicans for small-government advocates.

Absolutely. I'm a Republican, always have been, but I still have felt like I've been cast out into the wilderness the last decade. I did vote for GWB, but reluctantly. I did not like or trust him. For one thing, the moniker "compassionate conservatism" is absolute crap. It contains in it a slam of "normal" conservatism, and was signal that Bush's instincts were more liberal than conservative. And for all that liberals yell about the Iraq War, they don't acknowledge that liberals are often just as interventionist and idealistic as neocons.

Whatever the sins of Bush, the country hardly deserved what it's gotten now. I for one am fervently hoping we get a grown-up- a pragmatic leader- the next time around. Is that too much to ask??
 
Posted by Greg Davidson (Member # 3377) on :
 
Can you define what you mean by "a grown up" or "pragmatic"?
 
Posted by Gina (Member # 6372) on :
 
quote:
Originally posted by RickyB:
"Sort of like the FDR administration destroying food supplies during the Depression in order to prop up price controls, even though people were going hungry."

I love this. The good protestants shrug when people go hungry, leaving it to private charity to maybe save them, but then accuses the other side - the one that made sure as many people as possible DON'T go hungry - of starving children.

I'm not sure what you mean by "good protestants" (the progressives were pretty Protestant themselves, and just this week Obama has revived that specter), nor how you conjure a shrug. Liberals are always conjuring cold shrugs from conservatives. Be that as it may, nothing you say negates the original point. Government's "help" is all too often illogical, ill-conceived, and riddled with unintended consequences ("unintended" if you're charitable).

Since in many threads we're talking about health care, let's remember that the employer-based health system came out of the New Deal's wage and price controls, too. And these are the people who brought you forced sterilization, Tuskeegee (which was thought to be a compassionate program), and other such "helpful" initiatives. Today I've been watching documentaries on YouTube about the fluoride boondoggle, with visions of Obamacare's dirty partnership with big pharma dancing in my head. link to one of these

Basically, it comes down to this: DON'T HELP. Obama keeps saying, on this or that issue, that we can't afford to do nothing, and that his opponents want to simply do nothing. YES. Do nothing. PLEASE. Even when the government's own economists, to say nothing of the American people, tell him that they would rather he do nothing than implement his grand schemes, that he will actually make things worse rather than better, he pushes ahead. Then when they go pear-shaped, he reaches for the Bush card.

This is not to say that government is not needed, nor that it can solve some problems. More often than not, however, it creates bigger ones than the original one it meant to solve.
 
Posted by Gina (Member # 6372) on :
 
quote:
Originally posted by Greg Davidson:
Can you define what you mean by "a grown up" or "pragmatic"?

I contrast it to starry-eyed idealism, ideological rigidity, narcissism, and lack of character. Of these, Bush and Obama share them all, except that I think Bush has a great deal more character. Overall I am more struck by the similarities between Bush and Obama than their differences.
 
Posted by PSRT (Member # 6454) on :
 
quote:
ideological rigidity
I can only imagine that someone who thinks this is a characteristic possessed by Obama has not been paying attention.


quote:
Bush has a great deal more character.
If we define "character" as "bumbling idiot," then I agree.

[ August 22, 2009, 04:40 PM: Message edited by: PSRT ]
 
Posted by Greg Davidson (Member # 3377) on :
 
quote:
Let's remember that the employer-based health system came out of the New Deal's wage and price controls, too. And these are the people who brought you forced sterilization, Tuskeegee (which was thought to be a compassionate program), and other such "helpful" initiatives.
Gina, you are being silly with these tenuous associations. Some bad stuff happened during the time of the New Deal. Some bad stuff happens all the time. Are you arguing that employer-based health systems and medicare and social security should all be abandoned? How about getting rid of the 5 day work-week, occupational health, food and drug regulation, etc.?

If you want all that, it's there for you - just go live in Somalia
 
Posted by Gina (Member # 6372) on :
 
quote:
Originally posted by PSRT:
quote:
ideological rigidity
I can only imagine that someone who thinks this is a characteristic possessed by Obama has not been paying attention.

Are you still sticking with the campaign mantra that he's a centrist and a pragmatist? Good night, I would have thought by now that would not be advanced by even the most ardent Obama supporter.

As for bumbling idiot... well, let's just say Obama is not nearly as smooth as the hype, either. But Bush is much the bigger man, IMO. Just compare how he treated Obama in the transition to the vice versa. No, Obama is cheap and low. It is possibly more a function of his narcissism than anything else, but seems also to be a political strategy. I'm happy to see that more of the country is waking up to what a snake he is. I was starting to look for the pods.
 
Posted by Gina (Member # 6372) on :
 
quote:
Originally posted by Greg Davidson:
quote:
Let's remember that the employer-based health system came out of the New Deal's wage and price controls, too. And these are the people who brought you forced sterilization, Tuskeegee (which was thought to be a compassionate program), and other such "helpful" initiatives.
Gina, you are being silly with these tenuous associations. Some bad stuff happened during the time of the New Deal. Some bad stuff happens all the time. Are you arguing that employer-based health systems and medicare and social security should all be abandoned?
I would settle for all of those things being opt-out. At these health care townhalls where people are being asked if they're in Medicare, I would like to see them ask of the people under 40, who would like to opt out of SS and Medicare and put those payroll taxes towards their own retirement savings. I bet more than a few hands would go up.

Isn't it funny that bad stuff "just happened" during the New Deal. Sort of like thunderstorms and acne "just happen." Did the Iraq War (or name whatever political outrage you prefer) "just happen"?
 
Posted by Greg Davidson (Member # 3377) on :
 
Gina, the actions of government during the Hoover Administration did far more damage than the actions of government during the Roosevelt Administration. My point was that every large entity has some bad things that occurred. Evil people like Charles Manson or Jeffrey Dahmer went to elementary school, but that does not make the case that elementary school is the cause of evil.

Most countries and societies see a value in social programs that ensure some level of coverage. Among other things, this avoids the situation when someone "opts out" in their 30's and then has to suffer, beg or die if they face unexpected turns later in life. But if you don't like this, you are free to become a citizen of one of those countries where they don't share these values.
 
Posted by JoshCrow (Member # 6048) on :
 
quote:
Originally posted by Gina:

As for bumbling idiot... well, let's just say Obama is not nearly as smooth as the hype, either. But Bush is much the bigger man, IMO. Just compare how he treated Obama in the transition to the vice versa. No, Obama is cheap and low. It is possibly more a function of his narcissism than anything else, but seems also to be a political strategy. I'm happy to see that more of the country is waking up to what a snake he is. I was starting to look for the pods.

Snake? You've gotta be kidding me. Whatever contempt you have for his policies, the man has extremely high personal favorables, even among his opponents. I would call an attack on Obama's personal character completely baseless at the moment. It reflects more on you than on him that you feel this way about Obama the man. Maybe you should stick to his policies, which are certainly contestable.
 
Posted by Greg Davidson (Member # 3377) on :
 
Regarding the "snake comment", I appreciate that Gina shares with us the quality of her thinking and discernment; we can value her judgment on other matters accordingly.
 
Posted by Gina (Member # 6372) on :
 
quote:
Originally posted by Greg Davidson:
Gina, the actions of government during the Hoover Administration did far more damage than the actions of government during the Roosevelt Administration. My point was that every large entity has some bad things that occurred. Evil people like Charles Manson or Jeffrey Dahmer went to elementary school, but that does not make the case that elementary school is the cause of evil.

Do you think it makes any difference that FDR was just finishing what Hoover started? I am talking about statism, not partisanship. We are in the exact same position that the country was under the New Deal- both Republicans and Democrats exploiting crises in order to advance a statist agenda. The similarities are eerie, and you only bring them out.

As for whether or not Obama is a snake- or a thug, a political hack, and a sham artist, any one of which I might have said- I suppose that'll have to be left to personal judgment.
 
Posted by Gina (Member # 6372) on :
 
quote:
Originally posted by Greg Davidson:
Regarding the "snake comment", I appreciate that Gina shares with us the quality of her thinking and discernment; we can value her judgment on other matters accordingly.

And I yours. As I said, I'm simply glad to see that a number of people who supported him before are beginning to cotton on that they were sold a line of goods. Of course, I think there was plenty of evidence to be seen before the election about what Obama is.
 
Posted by Greg Davidson (Member # 3377) on :
 
I am not surprised by what I have seen, either from Obama, or from popularity polls that dip somewhat from smear campaigns that have accused Obama of promoting euthanasia.

And I think it speaks well of the intellectual independence and integrity of liberals that they feel free to criticize their own Presidential candidate even in his first year if he appears to moving in a direction that they do not approve. Our country would be in a better place in 2009 if some of the conservatives who now claim to have had some issues with President Bush could have voiced their concerns with his actions starting from his first year in office.
 
Posted by RickyB (Member # 1464) on :
 
The fact, Gina, that you insist that Obama is some flaming radical when all actual leftists are deeply disappointed in him, speaks more to your own ideological rigidity than anything else.
 
Posted by Gina (Member # 6372) on :
 
Well, I'm not the President. The one who is supposed to be leading the country- the whole country- not just be a political figurehead.

If Obama is not a flaming liberal, there are none. Just because he doesn't always get his way doesn't mean he's not trying really hard, and whining about every compromise made. Most of the time they are not real compromises, but feints.

Perhaps he'll improve, but right now I consider the country leaderless. We have a President in the technical sense, but not in the ways that matter.
 
Posted by sfallmann (Member # 2148) on :
 
quote:
Originally posted by RickyB:
The fact, Gina, that you insist that Obama is some flaming radical when all actual leftists are deeply disappointed in him, speaks more to your own ideological rigidity than anything else.

From what I've read the disappointment comes from his lack of stones or fighting ability.

Do you think he's been a moderate or tacking to the right? If that was true he'd be siding with the more conservative Democrats and he'd have a health care bill signed by now.

He follows Pelosi's lead in legislation. Her and her crew craft it, he tries to sell it. If you don't think she's a flaming radical that speaks more to your ideological rigidity than anything else.
 
Posted by sfallmann (Member # 2148) on :
 
quote:
Originally posted by Greg Davidson:
I am not surprised by what I have seen, either from Obama, or from popularity polls that dip somewhat from smear campaigns that have accused Obama of promoting euthanasia.

And I think it speaks well of the intellectual independence and integrity of liberals that they feel free to criticize their own Presidential candidate even in his first year if he appears to moving in a direction that they do not approve. Our country would be in a better place in 2009 if some of the conservatives who now claim to have had some issues with President Bush could have voiced their concerns with his actions starting from his first year in office.

What did Bush do that was objectionable in his first year? Real question. I don't quite remember anything controversial from the first year, especially the first half of that year.

Obama's dip has nothing to do with the "death panels". There is no single reason that's causing it. His handling of health care was the straw that broke the camel's back.
 
Posted by G2 (Member # 2942) on :
 
Last day of C4C since the program is being halted 2 months early due to lack of funding. How's things going? Eh, not so well:
quote:
Laura Sodano, a sales manager at Curry Chevrolet in Scarsdale, N.Y., said dealers were not told why their applications had not been approved and were having to review the entire form to determine what went wrong.

“I don’t know one dealership that’s gotten paid yet,” Ms. Sodano said. “If they run out, we’re in trouble. It’s bringing us a lot of traffic, but it’s not a very good program.

<snip>

If the funding is exhausted before all reimbursements are made, some dealers — and possibly G.M. — could end up having to write off the unpaid credits.

Great, that's just great. How many claims have been paid? As of last Thursday, 7%. Yes, seven.

For those wondering, the program is currently running $100 million for administrative costs. I wish that was a joke, $100 million for administrative costs. What did that translate to, about $2 million a day?

As for administration:
quote:
Employees of the FAA’s air-traffic-control unit were asked to help, but the Transportation Department stressed Friday that essential safety personnel were not diverted from their duties.

A total of 1,200 workers, including about 300 contractors from Citigroup, the financial services giant, are now working seven days a week to review applications and reimburse auto dealers for rebates advanced to customers, officials said.

The department tripled its program staff to 1,100 last week, and recently added another 100 headquarters employees…

The National Automobile Dealers Association, which had endorsed the move, urged the Obama administration late Friday to extend the deadline because the program’s Web site was crashing.

So let's make that $100 million for administrative costs and counting.

Oh yeah, this is a successful government program! You know what this is really? A typical government program. This is a brain dead simple one, wait until they apply this kind of success to health care.

[ August 23, 2009, 09:40 AM: Message edited by: G2 ]
 
Posted by Greg Davidson (Member # 3377) on :
 
Regarding the Bush Administration's 1st year, my point would have been better made if I had clarified that the country would have been better off if there had been conservative criticism across all of the years that Bush had been taking actions that have hurt the country. With respect to his first year, and especially the first seven months, I could see the far right in particular favoring many of his moves. Clearly, we would disagree over whether that was something worth criticizing, but I believe that it is noteworthy that by June, Senator Jim Jeffords left the Republican Party (the first time that Senate seat had not been Republican in 164 years).
 
Posted by Greg Davidson (Member # 3377) on :
 
This is for Gina, I just ran across it today. It's a twofer, a DailyKos posting from Senator Barack Obama. This is the man who you characterized by the comments "starry-eyed idealism, ideological rigidity, narcissism, and lack of character".


quote:
Tone, Truth, and the Democratic Party

I read with interest your recent discussion regarding my comments on the floor(1, 2, 3) during the debate on John Roberts' nomination. I don't get a chance to follow blog traffic as regularly as I would like, and rarely get the time to participate in the discussions. I thought this might be a good opportunity to offer some thoughts about not only judicial confirmations, but how to bring about meaningful change in this country.

Maybe some of you believe I could have made my general point more artfully, but it's precisely because many of these groups are friends and supporters that I felt it necessary to speak my mind.

There is one way, over the long haul, to guarantee the appointment of judges that are sensitive to issues of social justice, and that is to win the right to appoint them by recapturing the presidency and the Senate. And I don't believe we get there by vilifying good allies, with a lifetime record of battling for progressive causes, over one vote or position.
I am convinced that, our mutual frustrations and strongly-held beliefs notwithstanding, the strategy driving much of Democratic advocacy, and the tone of much of our rhetoric, is an impediment to creating a workable progressive majority in this country.

According to the storyline that drives many advocacy groups and Democratic activists - a storyline often reflected in comments on this blog - we are up against a sharply partisan, radically conservative, take-no-prisoners Republican party. They have beaten us twice by energizing their base with red meat rhetoric and single-minded devotion and discipline to their agenda. In order to beat them, it is necessary for Democrats to get some backbone, give as good as they get, brook no compromise, drive out Democrats who are interested in "appeasing" the right wing, and enforce a more clearly progressive agenda. The country, finally knowing what we stand for and seeing a sharp contrast, will rally to our side and thereby usher in a new progressive era.

I think this perspective misreads the American people. From traveling throughout Illinois and more recently around the country, I can tell you that Americans are suspicious of labels and suspicious of jargon. They don't think George Bush is mean-spirited or prejudiced, but have become aware that his administration is irresponsible and often incompetent. They don't think that corporations are inherently evil (a lot of them work in corporations), but they recognize that big business, unchecked, can fix the game to the detriment of working people and small entrepreneurs. They don't think America is an imperialist brute, but are angry that the case to invade Iraq was exaggerated, are worried that we have unnecessarily alienated existing and potential allies around the world, and are ashamed by events like those at Abu Ghraib which violate our ideals as a country.

It's this non-ideological lens through which much of the country viewed Judge Roberts' confirmation hearings. A majority of folks, including a number of Democrats and Independents, don't think that John Roberts is an ideologue bent on overturning every vestige of civil rights and civil liberties protections in our possession. Instead, they have good reason to believe he is a conservative judge who is (like it or not) within the mainstream of American jurisprudence, a judge appointed by a conservative president who could have done much worse (and probably, I fear, may do worse with the next nominee). While they hope Roberts doesn't swing the court too sharply to the right, a majority of Americans think that the President should probably get the benefit of the doubt on a clearly qualified nominee.

A plausible argument can be made that too much is at stake here and now, in terms of privacy issues, civil rights, and civil liberties, to give John Roberts the benefit of the doubt. That certainly was the operating assumption of the advocacy groups involved in the nomination battle.

I shared enough of these concerns that I voted against Roberts on the floor this morning. But short of mounting an all-out filibuster -- a quixotic fight I would not have supported; a fight I believe Democrats would have lost both in the Senate and in the court of public opinion; a fight that would have been difficult for Democratic senators defending seats in states like North Dakota and Nebraska that are essential for Democrats to hold if we hope to recapture the majority; and a fight that would have effectively signaled an unwillingness on the part of Democrats to confirm any Bush nominee, an unwillingness which I believe would have set a dangerous precedent for future administrations -- blocking Roberts was not a realistic option.

In such circumstances, attacks on Pat Leahy, Russ Feingold and the other Democrats who, after careful consideration, voted for Roberts make no sense. Russ Feingold, the only Democrat to vote not only against war in Iraq but also against the Patriot Act, doesn't become complicit in the erosion of civil liberties simply because he chooses to abide by a deeply held and legitimate view that a President, having won a popular election, is entitled to some benefit of the doubt when it comes to judicial appointments. Like it or not, that view has pretty strong support in the Constitution's design.

The same principle holds with respect to issues other than judicial nominations. My colleague from Illinois, Dick Durbin, spoke out forcefully - and voted against - the Iraqi invasion. He isn't somehow transformed into a "war supporter" - as I've heard some anti-war activists suggest - just because he hasn't called for an immediate withdrawal of American troops. He may be simply trying to figure out, as I am, how to ensure that U.S. troop withdrawals occur in such a way that we avoid all-out Iraqi civil war, chaos in the Middle East, and much more costly and deadly interventions down the road. A pro-choice Democrat doesn't become anti-choice because he or she isn't absolutely convinced that a twelve-year-old girl should be able to get an operation without a parent being notified. A pro-civil rights Democrat doesn't become complicit in an anti-civil rights agenda because he or she questions the efficacy of certain affirmative action programs. And a pro-union Democrat doesn't become anti-union if he or she makes a determination that on balance, CAFTA will help American workers more than it will harm them.

Or to make the point differently: How can we ask Republican senators to resist pressure from their right wing and vote against flawed appointees like John Bolton, if we engage in similar rhetoric against Democrats who dissent from our own party line? How can we expect Republican moderates who are concerned about the nation's fiscal meltdown to ignore Grover Norquist's threats if we make similar threats to those who buck our party orthodoxy?

I am not drawing a facile equivalence here between progressive advocacy groups and right-wing advocacy groups. The consequences of their ideas are vastly different. Fighting on behalf of the poor and the vulnerable is not the same as fighting for homophobia and Halliburton. But to the degree that we brook no dissent within the Democratic Party, and demand fealty to the one, "true" progressive vision for the country, we risk the very thoughtfulness and openness to new ideas that are required to move this country forward. When we lash out at those who share our fundamental values because they have not met the criteria of every single item on our progressive "checklist," then we are essentially preventing them from thinking in new ways about problems. We are tying them up in a straightjacket and forcing them into a conversation only with the converted.

Beyond that, by applying such tests, we are hamstringing our ability to build a majority. We won't be able to transform the country with such a polarized electorate. Because the truth of the matter is this: Most of the issues this country faces are hard. They require tough choices, and they require sacrifice. The Bush Administration and the Republican Congress may have made the problems worse, but they won't go away after President Bush is gone. Unless we are open to new ideas, and not just new packaging, we won't change enough hearts and minds to initiate a serious energy or fiscal policy that calls for serious sacrifice. We won't have the popular support to craft a foreign policy that meets the challenges of globalization or terrorism while avoiding isolationism and protecting civil liberties. We certainly won't have a mandate to overhaul a health care policy that overcomes all the entrenched interests that are the legacy of a jerry-rigged health care system. And we won't have the broad political support, or the effective strategies, required to lift large numbers of our fellow citizens out of numbing poverty.

The bottom line is that our job is harder than the conservatives' job. After all, it's easy to articulate a belligerent foreign policy based solely on unilateral military action, a policy that sounds tough and acts dumb; it's harder to craft a foreign policy that's tough and smart. It's easy to dismantle government safety nets; it's harder to transform those safety nets so that they work for people and can be paid for. It's easy to embrace a theological absolutism; it's harder to find the right balance between the legitimate role of faith in our lives and the demands of our civic religion. But that's our job. And I firmly believe that whenever we exaggerate or demonize, or oversimplify or overstate our case, we lose. Whenever we dumb down the political debate, we lose. A polarized electorate that is turned off of politics, and easily dismisses both parties because of the nasty, dishonest tone of the debate, works perfectly well for those who seek to chip away at the very idea of government because, in the end, a cynical electorate is a selfish electorate.

Let me be clear: I am not arguing that the Democrats should trim their sails and be more "centrist." In fact, I think the whole "centrist" versus "liberal" labels that continue to characterize the debate within the Democratic Party misses the mark. Too often, the "centrist" label seems to mean compromise for compromise sake, whereas on issues like health care, energy, education and tackling poverty, I don't think Democrats have been bold enough. But I do think that being bold involves more than just putting more money into existing programs and will instead require us to admit that some existing programs and policies don't work very well. And further, it will require us to innovate and experiment with whatever ideas hold promise (including market- or faith-based ideas that originate from Republicans).

Our goal should be to stick to our guns on those core values that make this country great, show a spirit of flexibility and sustained attention that can achieve those goals, and try to create the sort of serious, adult, consensus around our problems that can admit Democrats, Republicans and Independents of good will. This is more than just a matter of "framing," although clarity of language, thought, and heart are required. It's a matter of actually having faith in the American people's ability to hear a real and authentic debate about the issues that matter.

Finally, I am not arguing that we "unilaterally disarm" in the face of Republican attacks, or bite our tongue when this Administration screws up. Whenever they are wrong, inept, or dishonest, we should say so clearly and repeatedly; and whenever they gear up their attack machine, we should respond quickly and forcefully. I am suggesting that the tone we take matters, and that truth, as best we know it, be the hallmark of our response.

My dear friend Paul Simon used to consistently win the votes of much more conservative voters in Southern Illinois because he had mastered the art of "disagreeing without being disagreeable," and they trusted him to tell the truth. Similarly, one of Paul Wellstone's greatest strengths was his ability to deliver a scathing rebuke of the Republicans without ever losing his sense of humor and affability. In fact, I would argue that the most powerful voices of change in the country, from Lincoln to King, have been those who can speak with the utmost conviction about the great issues of the day without ever belittling those who opposed them, and without denying the limits of their own perspectives.

In that spirit, let me end by saying I don't pretend to have all the answers to the challenges we face, and I look forward to periodic conversations with all of you in the months and years to come. I trust that you will continue to let me and other Democrats know when you believe we are screwing up. And I, in turn, will always try and show you the respect and candor one owes his friends and allies.

Dkos User President Barack Obama, Sept 30, 2005


 
Posted by Kuato (Member # 6445) on :
 
I do love you, Greg.
 
Posted by G2 (Member # 2942) on :
 
Cash for Kitchens is up next:
quote:
A $300 million cash-for-clunkers-type federal program to boost sales of energy-efficient home appliances provides a glimmer of hope for beleaguered makers of washing machines and dishwashers, but it’s probably not enough to lift companies such as Whirlpool (WHR) and Electrolux out of the worst down cycle in the sector’s history.

Beginning late this fall, the program authorizes rebates of $50 to $200 for purchases of high-efficiency household appliances. The money is part of the broader economic stimulus bill passed earlier this year. Program details will vary by state, and the Energy Dept. has set a deadline of Oct. 15 for states to file formal applications. The Energy Dept. expects the bulk of the $300 million to be awarded by the end of November. (Unlike the clunkers auto program, consumers won’t have to trade in their old appliances.)

Will it repeat the cash for clunkers "success" with millions in administrative overhead and funding failures or will the government have finally figured this money transfer thing out?
 
Posted by Pyrtolin (Member # 2638) on :
 
I imagine that it will run a little better, since the basic rebate system for such has been around for a long while now with the various Energy Star incentives. And since, by the description, it'll be the states handling the actual programs and distributions.
 
Posted by G2 (Member # 2942) on :
 
I imagine it will be about the same as C4C but I'm basing my imagination on historical performance. This is a federal program that will interface the federal bureaucracy with another layer of state bureaucracy on top of it. Not just one state bureaucracy but all 50 of them. I'm sure each one will be at least slightly different.

That means retailers will have to adjust to the various states they want to sell in - I guess Whirlpool and GE and other national players will have to figure out 50 new programs and then all 50 will have to mesh with the federal layer that controls the underlying purse strings.

Yeah, I'm just not feeling all that optimistic on this one. I don't think it will be as spectacular a flame out as cash for clunkers because of the scale - only $300 million to start, less than half the size of C4C.

[ August 24, 2009, 02:44 PM: Message edited by: G2 ]
 
Posted by Gina (Member # 6372) on :
 
I have actually read that Obama piece from DKos, Greg. He is talking about "pragmatism" as a political strategy. Pretend to be centrist so that you can get the power to do what you really want to do.

And thus has it come to pass.
 
Posted by msquared (Member # 113) on :
 
Can any one figure out how the C4C program has affected our oil usage? I heard on NPR this morning that 700,000 cars were traded in and that the average increase in MPG was 10, give or take.

If the average person drives 15,000 miles a year that would be 10,500,000,000 miles driven. That would mean we should use 1,050,000,000 less gallons per year? Right? A billion gallons a year? That is 19,000,000 barrels of oil per year?

The EIA says that we now comsume 378,000,000 gallons of gas per day or 137,970,000,000 gallons per year. This gives a reduction of .014% per year?

Here is the link for the usage.

http://www.eia.doe.gov/basics/quickoil.html

Someone check my math. It seems like it should reduce it more.

msquared

edited to remove an extra 0 in a number.

[ August 24, 2009, 03:55 PM: Message edited by: msquared ]
 
Posted by G2 (Member # 2942) on :
 
In 2006, there were 251,000,000 vehicles on the road (probably more in 2009 but I ain't got 2009 data so lets go with '06). If we rotated out 700,000 then we had a churn of about 0.28%. So your math sounds like it's in the ball park.
 
Posted by Ciasiab (Member # 6390) on :
 
700k cars at 12k miles a piece gives 8.4 billion miles. Improving milage from 15.8 to 25.4 per here (dated I know) gives ~200 million gallons per year or 0.55 million gallons a day. Out of 378 million per day total, gives a 0.15% reduction.
 
Posted by Pyrtolin (Member # 2638) on :
 
quote:
Originally posted by msquared:
If the average person drives 15,000 miles a year that would be 10,500,000,000 miles driven. That would mean we should use 1,050,000,000 less gallons per year? Right? A billion gallons a year? That is 19,000,000 barrels of oil per year?

The EIA says that we now comsume 378,000,000 gallons of gas per day or 137,970,000,000 gallons per year. This gives a reduction of .014% per year?

Did you properly convert gallons of gas to barrels of oil (19.5 gallons of gas/barrel oil; there may be 42 gallons in a barrel, but only about half of it is useful for gas)

Muliplying your result by 20 puts you in the same ballpark as everyone else which is still pretty dismally small. The savings amount to half a day worth of gas per year.

Gives you a bit of perspective on just how much we're chewing up, through.
 
Posted by G2 (Member # 2942) on :
 
Gives you more perspective on just how worthless the program really was. $3 billion just for that minuscule amount? It's worse than this math implies too - there are plenty of studies that show people with higher mileage cars start driving even more than before.

$3 billion for what amounts to a drop in the bucket. I have yet to see any measurement which does not demonstrate anything but how badly this program sucked.
 
Posted by Ciasiab (Member # 6390) on :
 
Put another way, 200 million gallons of gas a year translates to ~1.75 million tonnes of CO2 emissions per year. Given a carbon offset credit costs around ~$30 USD/tonne, (here), to offset 1.75 million tonnes/year of carbon would have only cost $53 million USD/year.

From yet another angle, at $3 per gallon of gas, the program could pay out after 5 years if the goverment was recouping the decreased gas costs.
 
Posted by Gina (Member # 6372) on :
 
According to the SF Chronicle's enviro-blog, citing Edmonds.com, half of the vehicles purchased through the program were trucks or SUV's.

Since it exempted cars made before 1984, it also left the worst polluters on the road.

[ August 24, 2009, 06:59 PM: Message edited by: Gina ]
 
Posted by Greg Davidson (Member # 3377) on :
 
Gina and G2, please identify what you see as the flaw as the primary purpose of the cash for clunker's program, a stimulus measure that leverages government money by more than 3 to 1.
 
Posted by Pyrtolin (Member # 2638) on :
 
quote:
Originally posted by Gina:
According to the SF Chronicle's enviro-blog, citing Edmonds.com, half of the vehicles purchased through the program were trucks or SUV's.

Since it exempted cars made before 1984, it also left the worst polluters on the road.

Rather, it left the worst polluters in collectors garages, since the vast majority of cars of that vintage that are still drivable tend to only be brought out for an occasional show before being carefully stowed again.
 
Posted by Gina (Member # 6372) on :
 
quote:
Originally posted by Greg Davidson:
Gina and G2, please identify what you see as the flaw as the primary purpose of the cash for clunker's program, a stimulus measure that leverages government money by more than 3 to 1.

Because like the rest of the porkulus agenda it achieves none of its stated goals, neither stimulus nor environmental benefit. Like most of the administration's Keynesian dump, it is just money down a hole. It does, at least, give us yet another opportunity to observe the genius of our leaders' economic philosophy.

To me it is in fact a perfect microcosm of the administration's approach. Destroy actual wealth- usable vehicles that could have benefitted the market in other less spectacular, PR-worthy ways- simply to throw an expensive bone to your auto union pals.
 
Posted by Pyrtolin (Member # 2638) on :
 
That the vheicles whould have even remotely benefitted an already glutted used car market still stands as a completely unfounded assertion.

It has definitely served to put people back to work in the automotive industry and supply line. Putting people back to work helps, in generall push toward the critical mass needed to get employment rising again across the board. Additionally our current markey recovery is well ahead of then next two biggest crashes (Tech and Oil) and, while we were matching the trend from the great depression, we've exeeded it by not diving into a double dip now, so general claims that the market is being hurt here aren't very well borne up by the actual numbers. (Unless you want to claim that we'd likely be completely clear of the mess by now without them)

http://dshort.com/charts/bears/road-to-recovery-large.gif
 
Posted by G2 (Member # 2942) on :
 
quote:
The Obama administration declared the program a success. An estimate issued Monday by the White House Council of Economic Advisers said the program is projected to boost U.S. third-quarter gross domestic product by 0.3 to 0.4 percentage points and create 42,000 jobs by the end of 2009.

Many auto industry analysts and dealers expect sales volumes to fall now that the program is over. They worry that many people who took advantage of the program were merely accelerating purchases they would have made later in the year.

If that’s true, the premature sales could hurt automakers, which increased production in the third quarter to replenish clunker-depleted inventories that had already grown low because of factory shutdowns over the summer.

Because there’s a lag time between production and getting a vehicle to a dealership, the new vehicles “will hit when there’s a lower demand,” said Jeff Schuster, executive director of forecasting at the auto industry research firm J.D. Power and associates.

This is the result of the time shifting mentioned earlier in this thread. Reduced demand just as the ramped up production floods the dealerships. As Edmunds.com president Jeremy Anwyl said, “Nice party, but the hangover is awful.”

Ed Morrisey weighs in:
quote:
The people who bought cars under C4C would likely have bought new vehicles when the prices dropped enough, especially if gas prices pushed them to look for more fuel-efficient vehicles. Destroying their trade-ins make it more difficult for other families to buy used vehicles, both by ensuring a lack of inventory and having the supply squeeze drive prices upward.

To the extent that the program pushed people only marginally able to buy a new vehicle through the magic of trade-in inflation into making these purchases, it encouraged them to take on additional debt they likely can’t afford. Since the chronic issue with American families is too much debt rather than too little, that aspect of the C4C program will almost certainly produce bad results in the long term. We can expect higher-than-normal repo rates and loan failures, exactly the problem that created the current economic crisis.

This whole program is coming up roses. [Roll Eyes]
 
Posted by Gina (Member # 6372) on :
 
quote:
Originally posted by Pyrtolin:
That the vheicles whould have even remotely benefitted an already glutted used car market still stands as a completely unfounded assertion.

Sure, no consumer ever benefited from a buyer's market. Especially no poor consumer. Especially not in a recession. And not just the cars themselves, but the parts that otherwise would have been available for sale. I'm sure no charity would have wanted them, either. I can tell you that charities are hurting badly in this recession.

As for the jobs, what's going to happen to them now that the program has been disbanded? Is the administration going to continue to count them as "jobs created or saved" even though the bump was temporary?

Is it generally sound economic or environmental policy to throw large amounts of otherwise usable merchandise in the bin? What happened to "reduce re-use recycle"?
 
Posted by Greg Davidson (Member # 3377) on :
 
Gina,

The stimulus was to fix a problem with plummeting aggregate demand. The problem was spiraling downward expectations leading businesses and consumers to curtail future expenditures/investments. Stimulus expenditures put money in people's pockets now. Businesses start to see that and hire more (or stop laying people off). An expected external indicator of a success of the stimulus would be increased consumer confidence.

Guess what? This liberal economic policy is working a hell of a lot better than the nonsense conservative economic policy that drove us off the cliff, and has nothing better to offer than the faith-based mantra that tax cuts will fix all ills. Remember how screwed up things were even 9 months ago? In 1929 our economic health plummeted for almost four years until a liberal stimulus economic policy was put into place.
 
Posted by Pyrtolin (Member # 2638) on :
 
On that note- more than half of all employers are now reporting plans to hire for full time positions in the next year, and many have plans to hire contract and part time work as well.


Gina- again, the used car market is already a buyer's market. It's glutted past saturation. Adding more to that glut won't have any appreciable effect, aside from lowering what dealers will pay for trade-ins. They won't sell them much cheaper, but they'll just anticipate lanoger times on the lot till they scrap them anyway. Reducing the number of Ford Explorers (the top clunker scrapped in under C4C) added to excess inventories won't appreciably affect anyone's ability to get a cheap used car as they barely match that profile to begin with.

Also, the only parts that had to be fully scrapepd were the engine and transmission- all other parts, body, suspension, electronics, brake lines, etc... are fully open to salvage, so really they mostly added to the supply of parts that make up the bulk of repairs needed as (given, again, the glut of used vehicles) the price of a cheap used car is currently right in line with what it takes to replace an engine or transmission anyway.
 
Posted by Gina (Member # 6372) on :
 
quote:
Originally posted by Greg Davidson:
Gina,

The stimulus was to fix a problem with plummeting aggregate demand. The problem was spiraling downward expectations leading businesses and consumers to curtail future expenditures/investments. Stimulus expenditures put money in people's pockets now. Businesses start to see that and hire more (or stop laying people off). An expected external indicator of a success of the stimulus would be increased consumer confidence.

It is not working at all. Can you lay aside partisan rah-rah long enough to admit that? Even the Obama administration does. We have seen with successive "stimuli," first under Bush and then under Obama, that the few pennies thrown at the consumer do not outweigh people's fears of job losses (which continue to mount), price increases, inflation, and deficits which are now in the silly range. Businesses are still hunkered down because the administration continues to threaten them with new tax and regulation schemes.

And as for my question about when liberals found an enthusiasm for wasteful consumerism, crickets are still chirping.
 
Posted by Pyrtolin (Member # 2638) on :
 
The market is up, and performing better than it did coming out of the oil crisis in the 70's, the tech crisis in the 90's.
Consumer confidence is up.
House prices are leveliing if not mildly increasing.
Durable goods orders are up.
The rate at which unenmployment is increasing is going down.
More than half of compaines are planning on hiring in the next year.

Not all indicators are around the horn yet, but more of them are looking good with every report.

It's only in your assertions that it's not doing anything, not in the real numbers that are out there.

The only "admissions" that the stimulus wasn't doing anything was confirmations that there was little surprise that we didn't see much effect before June because that's about how long it took to gear up and begin using the money; it wasn't some magic effect that happened because the bill passed. And there's been a lot of disappoinment because we culd have been seeing even better results if we hadn't handicapped it out of the gate.
 
Posted by DonaldD (Member # 1052) on :
 
quote:
the few pennies thrown at the consumer do not outweigh people's fears of job losses (which continue to mount), price increases, inflation
Are people truly concerned about price increases right now? The CPI is headed downward at the moment.
 
Posted by G2 (Member # 2942) on :
 
So how's this program working out? Eh, not so well:
quote:
Roberts says his dealership sold 142 cars under the program -- for a total of about $568,000 in government rebates. So far, the dealership has only been paid about $68,000 for about 17 of the deals, which means Uncle Sam still owes them roughly $500,000.

"It's not crippling, but it definitely affects the cash flow on a regular basis," Roberts said.

Roberts says his dealership can handle the cash crunch, but others may not be as lucky, especially if they didn't follow the government's strict guidelines for the program.

"We know of one dealer that sold 40 cars under the Cash for Clunkers programs, and out of those 40 cars, he's expecting to get paid on eight," Roberts said.

Getting paid on only 20% of the cars? That dealer will be out between $112,000 and $144,000. With that volume, this is probably a pretty small dealer but even a large one hates to see a 6 figure loss they have to absorb. Remember when Wayward Son thought everybody was going to get paid and be happy? Seems like that won't happen ...


quote:
When Cash for Clunkers was first announced, dealers were supposed to be reimbursed within 10 days of a sale. Billion says that hasn't happened.

"The program started in July and we haven't gotten paid for cars we sold back then, but then on the other hand we got paid for a car we sold last week. They don't have an accurate format. It's not like they're taking the first deals that were submitted and working those. I don't know how they're doing it, no idea. I know it's very random" Billion said.

Plus, he's had problems getting some vehicles qualified.

"We had a situation where we had a submission, they rejected it for multiple reasons. We didn't see anything wrong with it, so we resubmitted it. They rejected, we resubmitted it. They rejected it, seven times and finally they paid it, and we never changed a single thing on it," Billion said.

Oh yeah, they're really going to manage health care properly. If they can't get this extremely simple program working right, you just know they going to nail it on health care. Not.
 
Posted by Pyrtolin (Member # 2638) on :
 
quote:
Originally posted by G2:
Oh yeah, they're really going to manage health care properly. If they can't get this extremely simple program working right, you just know they going to nail it on health care. Not.

They;ve had some trouble with the new apple pie recipe. Obviously there will be problems with the orange juice that they've been making for years.
 
Posted by kenmeer livermaile (Member # 2243) on :
 
"And as for my question about when liberals found an enthusiasm for wasteful consumerism, crickets are still chirping. "

Could you repeat or rephrase it? I don't see where you asked it. If I'm going to reply what will probably prove to be another red herring, I'd like to at least see it in the specified original.

For now, though: I had no idea that wasteful consumerism was more or less liberal or conservative. I thought it was 20 century Western, with special honors for American.
 
Posted by kenmeer livermaile (Member # 2243) on :
 
"If they can't get this extremely simple program working right, you just know they going to nail it on health care. Not."

Will you ever offer a substantive argument, particularly one based on positive suggestions?
 
Posted by G2 (Member # 2942) on :
 
I didn't realize it but Germany did their own C$C this year. Is this a glimpse at the US auto industry's future?
quote:
Earlier this year, the German government fast-tracked its cash for clunkers program, making billions available in order to support the flagging automobile industry. Close to 2 million German consumers went on car shopping sprees and scrapped their old cars in order to get a €2,500 ($3,575) payment from the government. The industry celebrated the development. And more than a dozen countries adopted the German model, including the United States, with its "cash for clunkers" program and France, with its prime à la casse scheme. But none of those programs was as big as that in Germany, where the government pumped €5 billion ($7.13 billion) into the scrapping bonus.

The impact the phasing out of cash for clunkers is expected to have in Germany is greater than in other countries, too. For 2009, the German Association of the Automotive Industry (VDA) is forecasting sales of more than 3.5 million vehicles. But next year that figure could be down by as many as 1 million cars, according to auto expert Stefan Bratzel. And that's dramatic -- the last time so few cars were sold was back in the 1970s, and those figures were solely for what was then West Germany.

I guess we should be glad ours got cut at the $3 billion mark, the fallout won't be as bad ... but there will be fallout just like Germany's:
quote:
"The federal government didn't do the automobile industry any favors with the scrapping bonus," says Stefan Bratzel, a professor at the University of Applied Sciences in Bergisch Gladbach near Cologne who specializes in the automotive industry. He says carmakers will pay a huge price for the economic bubble created by the premium, and that "2010 will be a horror year for the car industry."
Yeah, that C4C thing is great, just great.
 
Posted by yossarian22c (Member # 1779) on :
 
quote:
Originally posted by G2:
quote:
"The federal government didn't do the automobile industry any favors with the scrapping bonus," says Stefan Bratzel, a professor at the University of Applied Sciences in Bergisch Gladbach near Cologne who specializes in the automotive industry. He says carmakers will pay a huge price for the economic bubble created by the premium, and that "2010 will be a horror year for the car industry."
Yeah, that C4C thing is great, just great.
In the US the final total was around 700,000 cars. During the boom years the US was buying 15-16 million per year, analysts have predicted about 10 million for 2010. So even if every C4C sell was "stolen" from 2010 that would only be a 7% drop off for next year. That could hurt car dealers but it wouldn't be devastating.
 
Posted by yossarian22c (Member # 1779) on :
 
quote:
Transportation Department officials said the government has so far processed about $500 million in rebates from 120,000 sales. The goal in coming weeks is to add more workers to process about $100 million in rebates per day.
C4C Payout

So the government is a little slow getting the money out the door but 1/6 has been paid and if they start hitting the $100 million a day the dealers should have all their money by the end of September. Not great but the government does have a responsibility to try to prevent fraud and the DOT wasn't really set up for sending out $3 billion so overall I would rate them a B, B- on reimbursements.
 
Posted by G2 (Member # 2942) on :
 
They spent an astonishing $100 million in admin costs, these were fairly simple processes with 10 day turnaround guarantees and it's more like 10 weeks instead, *maybe* 10 weeks, who really knows for sure. That's a B effort? C'mon, you can't really be that easily impressed!
 
Posted by yossarian22c (Member # 1779) on :
 
Basing on how long it takes the IRS to send out tax returns that it does every year, yeah that's a B effort for government. There is a lot of red tape OUR representatives impose on them to prevent fraud so going from no infrastructure to pay out to dealerships to paying out $3 billion in three months isn't bad.

The only figure I saw for admin costs was $50 million but I'll use your $100 million price tag in this computation. Assume 10% went to setting up and maintaining the websites, putting the payment infrastructure in place and other costs (office supplies, ect). That leaves between 90 million to pay people to process claims. Assume the average government employee costs $6,000 per month (including all benefits). The program will run for about 3 months total leaving $30 million per month to pay people to process claims. Which would be about 5,000 employees to process 700,000 claims. The initial set up was somewhat messed up but now the ball seems to be rolling pretty smoothly so these 5,000 employees are going to process, verify, and pay out about 120 claims each in 1 month. Considering they have to coordinate with 50 different states and thousands of dealerships that isn't too bad (not great but ok).

Could the government have planned this better and been more efficient? Yes. Has the government done an adequate job in fixing those early mistakes (in particular vastly underestimating the popularity of the program)? Yes.
 
Posted by yossarian22c (Member # 1779) on :
 
quote:
Originally posted by G2:
They spent an astonishing $100 million in admin costs, these were fairly simple processes with 10 day turnaround guarantees and it's more like 10 weeks instead, *maybe* 10 weeks, who really knows for sure. That's a B effort? C'mon, you can't really be that easily impressed!

Sure I am, I just compared what the government actually did with what you predicted/feared they would do. [Wink]
 
Posted by kenmeer livermaile (Member # 2243) on :
 
100 million admin costs for 3 billion would be 3-4% admin costs. Scandalous!
 
Posted by G2 (Member # 2942) on :
 
quote:
Originally posted by yossarian22c:
quote:
Originally posted by G2:
They spent an astonishing $100 million in admin costs, these were fairly simple processes with 10 day turnaround guarantees and it's more like 10 weeks instead, *maybe* 10 weeks, who really knows for sure. That's a B effort? C'mon, you can't really be that easily impressed!

Sure I am, I just compared what the government actually did with what you predicted/feared they would do. [Wink]
I prefer to grade on actual results achieved myself. Comparative grading schemes only serve to mask failure. [Wink]

[ September 04, 2009, 10:03 AM: Message edited by: G2 ]
 
Posted by Wayward Son (Member # 210) on :
 
quote:
I prefer to grade on actual results achieved myself.
Then why were you expecting greater failure than was actually achieved?

And will this relative "success" compared to your initial expectations modify your expectations of failure in the future?

I know it will modify my expectations. Certainly not everyone is perfectly happy, although it does not appear at this time that anyone will go bankrupt because of the program.
 
Posted by Greg Davidson (Member # 3377) on :
 
quote:
Transportation Sec'y LaHood: Gov't on track to reimburse dealers for 'Clunkers' by Sept. 30

KEN THOMAS
AP News

Sep 10, 2009 09:02 EST

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.

LaHood said Thursday the government is on track to pay eligible dealers by a Sept. 30 deadline. More than 40 percent of the applications from dealers have been paid.

The rebates led to more than 690,000 new car sales at a taxpayer cost of $2.88 billion. Auto dealers have said the Obama administration has been slow to pay them for the car incentives, which ended on Aug. 24.


 
Posted by vulture (Member # 84) on :
 
quote:
Originally posted by yossarian22c:
In the US the final total was around 700,000 cars. During the boom years the US was buying 15-16 million per year, analysts have predicted about 10 million for 2010. So even if every C4C sell was "stolen" from 2010 that would only be a 7% drop off for next year. That could hurt car dealers but it wouldn't be devastating.

Surely one of the points of the C4C scheme was to 'steal' future car sales. Car sales were crippled by the recession, so to stop producers going to the wall, the government brought some future demand to the present by offering cash incentives to trade in now. It also has the intent of replacing cars with lower emission (and higher fuel efficiency) vehicles, and possibly generating slightly more overall demand, but the main economic effect is going to be in bringing demand forward from future years to now, so that car manafuacturer revenue streams don't dry up completely. Presumably because the extra financial (and political) costs of having huge companies go bust, or having to shut down factories, cancel orders to 3rd party suppliers (who then go bust) is worse that this.

The German scheme 'cost' $7 billion, but at the same time oiled the wheels of nearly $60 billion or so of trade (rough estimate). (Which, indicentally, generates about $11 billion of sales tax for the government). That's a much more efficient way of keeping jobs in existence than subsidising them more directly, although that would obviously be anathema in the US to an even greater degree [Smile]
 
Posted by G2 (Member # 2942) on :
 
quote:
Edmunds.com reports that “September’s light-vehicle sales rate will fall to 8.8 million units … the lowest rate in nearly 28 years, tying the worst demand on record. After the cash-for-clunkers program boosted August sales to their first year-over-year increase since October 2007, demand has plunged. In at least the last 33 years, the U.S. seasonally adjusted annual rate has only dropped as low as 8.8 million units once — in December 1981 — with records stretching back to January 1976.”

“Many people regard February as the darkest month of the recession, but even then (sales were) higher, at 9.1 million units,” adds Edmunds.com statistician Zhenwei Zhou.

Car makers, in response to the artificial demand ramped up production and now there's nobody left in the market to buy as we hit record lows in demand. Genius.
quote:
“It was probably, in the end, a complete waste of taxpayer money,’’ said John Wolkonowicz, a senior auto analyst at IHS Global Insight, Lexington forecasting firm. “The dealers, who were supposed to be the primary beneficiaries, many were forced into cash flow problems because the government didn’t pay them in a timely fashion.’’…

Robert O’Koniewski, executive vice president of the Massachusetts State Automobile Dealers Association, which represents 441 dealerships, estimated that most are probably still owed money.

As I said earlier, typical. Cars went out and were destroyed and dealers just can't get their money as promised. How long can they tolerate the squeeze?
quote:
Wolkonowicz said the fall slowdown may have been worsened by the program because many buyers came out early to take advantage of the program instead of waiting until now to shop.
The purchases were not new, merely time shifted into one lump. In the end, this program did nothing to help and because of cash flow and surplus inventory problems will actually make things worse. Dealers are in a cash flow crunch now because they can't get reimbursement. How bad will it get when nearly everyone that was going to buy a car over the next year already has one?
 
Posted by Pyrtolin (Member # 2638) on :
 
Yeah not even getting into the poor administration of the plan) this is the kind of fallout you see when you cut a support too early. C4C (and similar programs) only work if they're run for long enough for natural demand to catch back up, then are phased out instead of being yanked out.
 
Posted by hobsen (Member # 2923) on :
 
Perhaps dealers will still go under, but in fact about 85% of claims now seem to have been paid. At the rate payments have been proceeding over the last twelve days - about a hundred million a day - the routine payments should be finished before this weekend, although no doubt a few with faulty paperwork will take longer to clear.
quote:
WASHINGTON -- Dealers’ cash-for-clunkers submissions continue to be cleared at an accelerated pace, with 93 percent now paid or approved by the U.S. Transportation Department, the agency says.


A total of 636,370 claims for $2.7 billion were paid or approved as of yesterday morning, Transportation said today on its cars.gov Web site.

Of that, 562,360 vouchers for $2.4 billion were paid, the posting said. An additional 74,010 claims for $310.4 million were approved but not yet paid.

http://www.autonews.com/article/20090922/ANA05/909229991/1078

[ September 22, 2009, 02:57 PM: Message edited by: hobsen ]
 
Posted by G2 (Member # 2942) on :
 
690,000 new vehicles were sold under the Cash for Clunkers program last summer and the government line will be that is indicative of the success of this program. Like so many things from the Obama administration, that's not the reality. Edmunds is an industry analyst organization and their people looked at sales of vehicles not included under the Clunkers program (like luxury vehicles). Using traditional relationships between sales volumes of those vehicles and the types of vehicles sold under Cash for Clunkers, Edmunds projected what sales would normally have been during the Cash for Clunkers period. In a nutshell, they're figuring out just how many cars would have been sold without the program to determine how many cars were actually sold as a result of the program. The overwhelming majority of sales would have taken place anyway at some time in the last half of 2009 and most people simply took advantage of the C4C program because it was there, it was not a factor in the purchase decision.

The real number: 125,000. $3,000,000,000 to buy and extra 125,000 cars - that works out to about $24,000 per car. Brilliant, just freaking brilliant.
 
Posted by edgmatt (Member # 6449) on :
 
$24,000 to where? Who got the $24,000 per car?
 
Posted by BobDylanThomas (Member # 6520) on :
 
quote:
Originally posted by Pyrtolin:
Yeah not even getting into the poor administration of the plan) this is the kind of fallout you see when you cut a support too early. C4C (and similar programs) only work if they're run for long enough for natural demand to catch back up, then are phased out instead of being yanked out.

Pyr,

Maybe Obama is FDR after all?
 
Posted by MattP (Member # 2763) on :
 
quote:
$24,000 to where? Who got the $24,000 per car?
If you divide the amount of money put into the program by the number of incremental sales* (125,000) rather than the total number of sales (690,000) then you get a cost of $24,000 for each car sold which would not have sold even without the stimulus.

I think this is a mostly fair way of looking at the value of the program, though I imagine a significant portion of the funding towards the non-incremental sales probably resulted in people buying more expensive cars than they would have otherwise.

* Assuming the methodology is sound.

[ October 30, 2009, 11:49 AM: Message edited by: MattP ]
 
Posted by philnotfil (Member # 1881) on :
 
edmunds.com
quote:
Nearly 690,000 vehicles were sold during the Cash for Clunkers program, officially known as CARS, but Edmunds.com analysts calculated that only 125,000 of the sales were incremental. The rest of the sales would have happened anyway, regardless of the existence of the program.
quote:
To conduct the analysis, the Edmunds.com team of PhDs and statisticians examined the sales trend for luxury vehicles and others not included in Cash for Clunkers, and applied the historic relationship of those vehicles to total SAAR to make informed estimates. These estimates were independently verified through careful examination of sales patterns reflected by transaction data. Once the numbers were determined, Edmunds.com's analysts divided three billion dollars by 125,000 vehicles to arrive at the average $24,000 per vehicle.

 
Posted by edgmatt (Member # 6449) on :
 
So it cost us taxpayers 24,000 for each car sold under this program. I am asking where that 24,000 went to. Did the car dealerships get it? Did the guys who bought the new cars get it? Was it burned? Did politicians get it?
 
Posted by MattP (Member # 2763) on :
 
quote:
So it cost us taxpayers 24,000 for each car sold under this program. I am asking where that 24,000 went to. Did the car dealerships get it? Did the guys who bought the new cars get it? Was it burned? Did politicians get it?
An average of about $4,300 went to the buyer of every one of 690,000 cars sold under the program. The point being made though is that about 565,000 of those buyers would have bought a new car even without the incentive. If we divide the cost of the program $3,000,000 by the actual number of incremental sales then the cost to the government for each new sale was about $24,000. No one is claiming that anyone got a $24,000 incentive to purchase a single car.

[ October 30, 2009, 01:00 PM: Message edited by: MattP ]
 
Posted by MattP (Member # 2763) on :
 
quote:
To conduct the analysis, the Edmunds.com team of PhDs and statisticians examined the sales trend for luxury vehicles and others not included in Cash for Clunkers, and applied the historic relationship of those vehicles to total SAAR to make informed estimates.
I wonder about the application of historic relationships to current trends. The current economic environment is unprecedented.

Are high wage earners losing jobs at the same rate as lower wage earners? How might that affect the rate at which different classes of automobiles are sold? It seems like there are a lot of potentially confounding factors.
 
Posted by Greg Davidson (Member # 3377) on :
 
quote:
To conduct the analysis, the Edmunds.com team of PhDs and statisticians examined the sales trend for luxury vehicles and others not included in Cash for Clunkers, and applied the historic relationship of those vehicles to total SAAR to make informed estimates
I have spent my adult working life with many people who are Ph.D's and I have discovered a trend. Capable researchers show their results and rely on the quality of their analysis or test to prove their point. Third rate researchers note that they are Ph.D's but generally don't describe the methodology of their analysis or allow inspection of their results.

I don't know these guys are wrong, but there is inadequate evidence in this press release to substantiate their case. On the other hand, the drop in sales in September is consistent with the hypothesis that C4C accelerated purchases rather than stimulated new ones. Let's see if the trend holds for the next 6 months, and then I could be convinced that it was acceleration not increase.
 
Posted by Greg Davidson (Member # 3377) on :
 
quote:
Durable goods purchases have been increasing for the last four months. This is very good news as it indicates cash for clunkers did not skew purchases forwarded as feared.
August was a positive spike, September was a deep drop, but then there has been steady growth in the intervening months. See this article on beige book data released
 
Posted by G2 (Member # 2942) on :
 
quote:
Originally posted by Greg Davidson:
quote:
Durable goods purchases have been increasing for the last four months. This is very good news as it indicates cash for clunkers did not skew purchases forwarded as feared.
August was a positive spike, September was a deep drop, but then there has been steady growth in the intervening months. See this article on beige book data released
Durable goods does not equal cars; many, many things make up the category "durable goods" besides cars - for example: appliances, business equipment, electronic equipment, home furnishings and fixtures, houseware and accessories, photographic equipment, recreational goods, sporting goods, toys and games (according to wikipedia).

If we want to focus on car sales, the let's focus on car sales like the International Business Times did just last week:
quote:

Car sales in the US, Germany and Italy stalled last month, a situation that could put further pressure on embattled manufacturers if it continues, and on beleaguered economies as well.

<snip>

Industry-wide sales for February were flat from the depressed sales rate of 2009.

Industry-wide US sales were 10.38 million vehicles, according to industry watcher Autodata.

That's down from the 10.8 million rate in January.

Sales dropped to 10.4 million units in 2009, the worst performance in 27 years.

FiveThirtyEight is trying to give the impression that something is happening that really isn't. Any idea why? Perhaps IBT has a hint:
quote:
The weak auto figures add to emerging concerns that the US economic recovery could stumble in the second half of the year if spending remains lackluster. Consumer spending is considered the key to recovery because it accounts for roughly two-thirds of economic activity.


[ March 08, 2010, 09:32 PM: Message edited by: G2 ]
 
Posted by Greg Davidson (Member # 3377) on :
 
Give me 4 months of data please. That way things like snowstorms don't distort the data.
 
Posted by Wayward Son (Member # 210) on :
 
Here is the article G2 referenced, if anyone is interested.

Greg has an excellent point, G2. Consider this quote from your source:

quote:
The fear is that now, with the impact of cold snowy weather across much of Europe and the US since January, there will be further downward pressure on sales and production and on economic growth.
[Emphasis mine.]

Your own article attributes the decrease to the weather.

In fact, you omitted the two paragraphs after your final quote. Here's the entire passage:

quote:
The weak auto figures add to emerging concerns that the US economic recovery could stumble in the second half of the year if spending remains lackluster. Consumer spending is considered the key to recovery because it accounts for roughly two-thirds of economic activity.

But analysts blame a combination of the snow storms in the East, parts of the Midwest and South, plus the problems and recalls at Toyota for the slide.

They say they expect sales to rebound in March.

So, G2, why did you decide to omit these rather important qualifiers to your quote? Didn't you think they had some bearing on your point about the auto industry not recovering from the Cash for Clunkers program? Or did you think that facts that weaken your point are insignificant for consideration?

Let's hear it, G2. What do you got to say? [Smile]

[ March 09, 2010, 10:39 AM: Message edited by: Wayward Son ]
 
Posted by G2 (Member # 2942) on :
 
Coming back around to this ...

The weather excuse is bull**** and lame bull**** at that. From 1999 to 2007 auto sales were above 16 million. The current projection is that 2010 U.S. auto sales to rise to 11.7 million - and that's the optimistic projection. Do you really think it's the future weather driving this? [Smile]

Meanwhile, back in the real world, some post mortem is being done on the whole C4C program. There's been some analysis of the deadweight loss from C4C.
quote:
Deadweight loss refers to any insufficiency caused by ineffective distribution of resources. This is also known as excess burden or allocative insufficiency. These terms are used in economics.

This situation can happen due to artificial scarcity brought about by monopoly pricing. Other reasons are subsidies, binding prices (floorings or ceilings) and externalities

The results:
quote:
We estimate that the deadweight loss to the U.S. economy and taxpayers resulting from the government's "Cash for Clunkers" program to be $1.5 billion dollars.
That's just great.
 
Posted by hobsen (Member # 2923) on :
 
If auto sales indeed topped 16 million from 1999 to 2007, it does not seem unlikely they should decline to 12 million this year, which is at the tail end of what everyone now admits to have been a severe recession. That is only a 25% decrease. While I have not checked the historical figures, I should have expected auto sales to decrease by at least 20% in previous recessions; and this has been a more severe one. Perhaps I am wrong, but there still remains a question as to whether car sales declined disproportionately this time, or whether this recession was simply more severe.
 


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