Just another slow news day for Cash for Clunkers. The Washington Post reported that "dozens" of auto dealers were pulling out of the program, citing "problems in getting reimbursed." Fox News followed up with the news that major car manufacturers were guaranteeing the rebates "following complaints that thousands of dealer claims have been delayed or rejected by the federal government." Finally, the government joined the fray, announcing that the program would not be accepting any new claims after 8 p.m. next Monday.
All of these stories are variants on the same point. The program was hugely popular, swamping the staff and resources of the government, overwhelming dealers with interested participants, and ripping through inventory so quickly that car manufacturers started rehiring and bringing mothballed auto plants back online. The government is not closing down the program because of dealer complaints -- it's closing down the program because Cash for Clunkers burned through the additional $2 billion in funding that Congress authorized three weeks ago.
Now we will have to wait and see how lasting the long-term effects of this short-term stimulus shot-in-the-arm will be. Did Cash for Clunkers "steal" demand from the future, setting up automakers for a speed rush that will leave everyone deflated and cranky after the sugar buzz burns off? Or has the pump been effectively primed, so that automakers will continue happily ever after?
One final data point. Barry Ritholtz links to the 10 most popular Cash for Clunkers models traded for. Only two models are American -- the Ford Focus and Ford Escape. GM and Chrysler: no shows -- even though GM is one of the manufacturers rehiring workers.