An unfortunate glitch

Friday, Aug. 21, 2009 | 2:10 a.m.

Car dealers have been doing their part in the Cash for Clunkers program, which ends Monday night, but many have found that the federal government fell short on its end.

So many complaints from car dealers were lodged that Transportation Secretary Ray LaHood had to personally reassure them Wednesday. The complaints are focused on the failure of the government to send timely reimbursement checks.

Consumers in the market for a car rarely encounter a problem in choosing from a large variety of models. This convenience is not because dealers have paid for those cars from ready cash. They have to borrow the money, and they generally have only a short time to pay it back.

Under the Cash for Clunkers program, consumers can trade in their older gas hogs for newer, more fuel-efficient cars, and get a federally funded discount of up to $4,500. The government invested $3 billion in this program as a way of stimulating car sales during the recession and as a way of reducing harmful emissions.

Most car dealers were eager not only to participate in the program, but also to promote it through advertising. A significant number of them, however, opted to end their participation early because of the way the program was working, or, more accurately, not working.

The dealers pay the customer’s discount at the time of sale and then submit paperwork to the government for reimbursement. Many dealers say the reimbursements are being unreasonably delayed or not coming.

“I know dealers are frustrated,” LaHood said. “They’re going to get their money.” Car dealers need their money in a hurry, though, to avoid getting dinged by their lenders.

The government has hired more people to process the dealers’ reimbursement claims. But it is unfortunate that the government originally underestimated how popular this program would become. We support creative government programs that help businesses suffering from the recession, but before being launched, they should be thought through to the end.