Pawlenty gives cash for clunkers a thumbs-down

Gov. Tim Pawlenty ripped into the popular cash-for-clunkers program Friday, ridiculing it as nonsensical, even as Minnesotans have flocked to take advantage of it.

It makes no sense, he said on his weekly radio show, for the federal government to bail out a company such as General Motors and then give consumers as much as $4,500 to buy a car from GM.

"It makes everybody feel good," Pawlenty said, "but because we own GM, we're just paying ourselves back. It seems a little odd."

His comments, made shortly after President Obama signed into law a $2 billion infusion into the clunker program, weren't greeted warmly by the spokesman for the state's auto dealers.

"I think the governor's comments are unfortunate and maybe ill-informed," said Scott Lambert, executive director of the Minnesota Auto Dealers Association. "This program has clear benefits to it. The only downside is that it's using taxpayer money, but it's stimulus money that's working. It's promoting some of the biggest economic activity the state has seen all summer."

And a spokesman for the 10-dealer Walser Automotive Group pointed out that the state, facing a multibillion-dollar budget deficit, stands to enjoy a windfall from the sales tax paid on thousands of new cars.

"If I was running the state, I'd consider that," said Doug Sprinthall, Walser's director of new vehicle operations. "Personally, I may question the legislation, but as a retailer I wanted to take advantage of it. ... I disagree with the governor."

Both Lambert and Sprinthall said they believe uncertainty about the future of the program created pent-up demand among would-be car buyers.

"I suspect a fair number of people held off while this was being decided, so we'll see [Saturday] morning," said Sprinthall, whose dealerships already have submitted nearly 1,000 deals for federal approval. "I don't think you'll see quite the mania we had earlier, though."

Based on anecdotes he's heard from dealers around the state, Lambert said, "I think there's a lot of demand still out there, especially because a lot of people had been turned away because of the registration problem." A technical glitch in Minnesota's vehicle registration system -- since fixed -- caused many prospective buyers initially to be turned away.

Obama signed the $2 billion infusion into law Friday morning after the U.S. Senate voted Thursday night to pump the money into the vehicle-purchase program, which was due to run out of funds.

"Now more American consumers will have the chance to purchase newer, more fuel-efficient cars and the American economy will continue to get a much-needed boost," Obama said in a statement hailing the vote.

Nationwide, dealers say that the additional money will help them maintain a sales pace that they haven't seen in months and that they will continue to benefit from heavy publicity surrounding the rebates.

Beyond the boost to car sales, Walser's Sprinthall said the clunker program "has been good psychological news for people whether they're buying cars or not. There's been enough good economic news that it feels like Armageddon may be behind us."

The $2 billion is being borrowed from another stimulus program that loans to green energy projects. Congress is intent on replenishing that program as well, meaning the fresh infusion of cash-for-clunkers spending is likely to add to the federal deficit.

Pawlenty took aim at that, too, criticizing the federal government's tendency "to borrow money to pay for a new program."

Echoing the general Republican critique of the rebate program, Pawlenty said it was part of a broader phenomenon, "as the federal government continues to politicize economic decisions, [making] value judgments about what people can and can't do."