Clunkers, Health Care and Uncle Sam

Have you noticed any correlation between the “Cash for Clunkers” program and health care reform?

Some months ago, there was a crisis in America: US auto makers were in trouble. Uncle Sam’s solution was to provide billions of dollars to carry Chrysler and GM through the troubled times. This did not prevent the bankruptcy of both companies and the subsequent revision of bankruptcy law to allow unsecured creditors, critical to the current administration’s election, recovery denied to secured creditors.

Then, Uncle Sam decided to further boost the industry and improve the gas mileage of the nation through the Cash for Clunkers program. Congress approved $1 billion to provide up to $4,500 for specified trade-ins, based in large part on the gas mileage of the trade-in and the mileage of the new auto. The program was designed to function with initial funding through November.

Within days of announcing the program, Uncle Sam changed the “official” gas mileage ratings of used cars, making many ineligible for the program. Within a week of implementation of the program, it was out of money.

Of course, Uncle Sam’s solution was to immediately push more money at the program, approving $2 billion in additional monies- 300% the projected cost.

The program requires dealers front the rebates out of pocket, and then wait on reimbursement from the government. Today, the Associated Press reports “a growing number of auto dealers ceased offering the program. A group representing New York metro dealerships said Wednesday that that hundreds of its members have withdrawn from Cash for Clunkers, citing delays in getting reimbursed.” The nation’s largest retailer, AutoNation is currently owed $45 million by Uncle Sam. Speaking for Uncle Sam, Transportation Secretary Ray LaHood tried to ease concerns by assuring dealers that they would eventually be reimbursed.

During this same general time frame, Uncle Sam explained the depths of the health care crisis in America, and the immediacy for a complete reform of nearly 20% of the nation’s GDP. He promised a solution to the crises that would bring about cost savings, better care, and more choices for the American people.

These are the same promises of TARP, the bailouts, and Cash for Clunkers. I find it fascinating that our own Uncle Sam expects us to believe that he can manage an industry 2000 times larger than the program that failed only weeks after he created it.

Americans may have a short memory, but we are not stupid.

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