The Bureaucratic Nightmare of Cash for Clunkers is Only Beginning

We've all heard that cash for clunkers is ending on Monday. Some of us have heard that only about 20% of the files have been processed. Even less than that have actually been paid. So, now, auto dealers are going to be racing against the clock to get their applications in to make sure they get paid.

To most of us, this is a matter of debate and derision, depending on your perspective. To the auto dealers it's a matter of economic life and death. The dealers have been put into an impossible position. There was no way an auto dealer could avoid joining up with this program. It's created all sorts of sales and customers would have gone somewhere else if they didn't sign up. At the same time, they fronted the money expecting to get paid in ten days. Ten days is what the government promised.

Now, many auto dealers say that after a month and more they have been paid on scant few of the applications. Since they fronted the money, this has caused many of them to have a cash crunch. Now, they only have two days to make sure that all of their applications are done and downloaded to the government. Did I mention that the government's web site for all of this continues to crash?

So, now with two days left auto dealers everywhere are hoping that they will finish all the applications in time. Then, they'll wait and hope that at some point they will get paid. Then, there's this.

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.

So, now the government has to move bureaucrats from other departments to handle the backlog of applications that this program created.

The bureaucratic nightmare is still in front of everyone. Everyone continues to assume that everything will work out. This is a foolish assumption. Dealers assumed that they would get paid in ten days and they haven't. Over the next two days dealers from all over the country will all attempt to download tens of thousands of applications all at once. If the systems were crashing before, it will be a total debacle in the next two days. The government says that any application that isn't totally completed by midnight on Monday won't be honored. Hundreds of millions of dealer dollars are on the line. You can bet that tens of millions will still be in limbo on Tuesday. So, what will happen when the system constantly crashes and dealers aren't able to download their applications? Will the government really allow these dealers to face financial ruin? Will they extend the time to hand in the applications? How long will it take for the government to pay it all back? What sorts of cash problems will this create for auto dealers? The bureaucratic nightmare is only beginning.