Cash, er…IOUs for Clunkers

I really haven’t blogged about the government’s “Cash for Clunkers” program in which federal taxpayers give purchasers of certain automobiles from $3,500 to $4,500. The program is based on such transparently bad economics that it really didn’t merit any mention. Of course, politicians, those who take money from one group of people and give it to others, have justified the program based on its popularity. Dropping money our of airplanes would be popular as well, at least if you are one of the lucky people standing on the street as the planes fly over.

But, as is so often the case with government, what they say and what they do are two different things. This report from Maryland explains that fewer than 2 percent of claims for reimbursement in Maryland have been paid by the feds. Of course, government officials are blaming dealers for “submitting incomplete claims, which in turn cause delays.”

It is no surprise that car dealers, most of whom until recently were not experts in filling out government paperwork might not dot all the i’s and cross all the t’s required by the bureaucrats. I’m not sure how this situation will play out, but it seems quite likely that many dealers will lose out on thousands or even millions of dollars while the government reimburses other people who take advantage of the system.

The real story is that this is the way government works all the time. It’s not just health care, but “cap-and-trade,” Social Security, Medicare, and nearly all programs administered by the federal government that are not found in the US Constitution.