US Government a Deadbeat

August/24/2009 8:18AM
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The Cash for Clunkers Program shows our government can’t manage anything. Virtually no money has been repaid car dealers for their sales rebates. The Transportation Department put together a rebate plan that is unworkable for either them or the dealers.

Many dealers quit the program early when they found they had to finance the whole plan. At a time when dealers are strapped for cash due to an extended sales slump and credit restrictions, the government straps them to the limit by not expediting the repayment of monies owed by the government.

The idea to use the Internet to expedite payments was appropriate. But, to process the claims the dealers had to scan up to 50 pages of documentation for every sale. The web site crashed. Dealers had to have employees sit in front of the computer 24/7 to get the documents filed on an web site not designed to handle 10% of the traffic.

Then there is the customary nit picking. Since the rules were hundreds of pages long, there were lots of possibilities to make a minor mistake. One thing bureaucrats do well is find mistakes. They are unable to apply common sense to minor mistakes, so any application with a minor error just goes back. No sympathy for the dealer and his cash flow. It’s the rule.

As a retired marketing executive I was involved in running many promotions. There were rules of thumb. Make it simple so everyone can understand it. It has to be explained in a sound bite. Have the required fraud protection but don’t let those destroy the promotion. If it can, scrap the idea. Don’t make your dealers suffer. If you do, you won’t get cooperation on the next promotion. Every part of the Cash for Clunkers program failed the marketing litmus test.

First, don’t pay out more than you planned to pay in the budget for the promotion. The government plan, which was to run several months, ran out of money in a week. Second, don’t make it so cumbersome that it takes away from the dealers’ daily business. Third, when it’s over everyone should be happy, the company, the dealers, and the customers. With Cash for Clunkers, I’m not sure anyone is happy. The government says it was a success. But, the heat they have taken in the media for screwing up all aspects of the program has spilled over into Obama’s vaunted health care reform. That can’t make the Big Boss very happy.

Is the government making adjustments on the fly to get money to the dealers. Of course not. The government could care less about the dealers’ cash flow problem.

It may take weeks for the dealers to be repaid. Many may be paying interest on short-term loans to cover cash flow.

You want to watch our government in action, take a long hard look at the indifference they have on this simple deal. The same indifference would apply if you needed approval for open hearth surgery.

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