This new Motley Fool series examines things that just aren't right in the world of finance and investing. Here's what's got us riled today. If something's bugging you, too -- and we suspect it is -- go ahead and unload in the comments section below.
Today's subject: The Cash for Clunkers program helped more than a half-million Americans dump their gas guzzlers. The $3 billion program aided consumers to exchange 700,000 cars in little more than 30 days -- definitely no easy feat. According to the Transportation secretary, "There can be no doubt that this program drummed up more business, for more people, in more places at a time when our economy needed help the most." That's certainly true for companies like Ford (NYSE: F ) , Toyota Motor (NYSE: TM ) , General Motors, and Group 1 Automotive (NYSE: GPI ) , which all saw nice sales boosts.
While no one can argue the creativeness of the program, many are still debating its success. Critics see the stimulus as a way for the administration to cherry-pick which industries benefit, and then make taxpayers foot the bill. It also adds fuel to the fire as more people voice concern over the government's willingness to spend dollars they don't have. In addition, many dealers were upset with the government's slow processing of claims. Specifically, AutoNation (NYSE: AN ) said in August that it was still waiting for $45 million in rebates.
But if you think any of those reasons are grounds for disparagement -- think again. Brought to my attention by a Wall Street Journal editorial, there is another, less-hyped auto-subsidy program that's designed to promote the purchase of electric vehicles. But in what seems like the most idiotic and wasteful use of taxpayer money yet, this program includes golf carts. Yes, you heard me right: golf carts.
Why you should be indignant: I cannot imagine any logical reason why taxpayer money should be used to subsidize the purchases of golf carts -- especially considering there are barely any restrictions placed on the ability to obtain the subsidy. Wait -- silly me -- the government has added some restrictions to make sure this legislation isn't taken advantage of. In order for your modern-day necessity to qualify, it needs to be "road worthy," meaning it has to have side mirrors and seatbelts. So for those of you cruising at a leisurely 15 mph, sipping a late-day margarita, and chasing golf balls on a sunny afternoon -- here's your tax break from Uncle Sam. You just received a $4,200 to $5,500 federal credit for the purchase of your new electric vehicle.
The worst part is that with no limit on the number of electric vehicles one can buy, people are potentially out there hoarding golf carts while the federal credit lasts, selling them down the road for a nice return.
Case in point: Villages Golf Cart Man, a business operating out of Lady Lake, Fla., is now running an ad that says "GET A FREE GOLF CART. OR MAKE $2,000 DOING ABSOLUTELY NOTHING!" Apparently, Golf Cart Man is referring to its offer, in which, to quote the Journal, you "buy the cart for $8,000, get a $5,300 tax credit off your 2009 income tax, lease it back for $100 a month for 27 months, at which point Golf Cart Man will buy back the cart for $2,000." The end result: The government has created a loophole that enables crafty golf lovers the ability to own a golf cart for free, or to get $2,000 doing nothing.
What now? I don't even know where to go from here. Should you be mad at Congress for putting such an absurd program into the stimulus bill? Should you be mad at people who are erroneously taking advantage of something that was meant to increase the use of electric vehicles? I think in this situation you have carte blanche to be irate at pretty much anyone involved. And if you see your next-door neighbor stuffing electric carts into their garage, well, you can decide for yourself what to do.
Let me know your thoughts in the comment section below. Is this the most ludicrous thing you've ever heard?
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