October 30, 2009

White House Blog Whines About Edmunds’s C4C $24K/Car Claim, Ignores Current Consequences

cry-baby-cartoonWe’re just going to have to get used the fact that we’re long past the point where we should expect dignity and stick-to-the-facts restraint from this White House. Going after its critics is something the previous Bush 43 administration should have done more, but on the rare occasions when it did, it conducted itself and framed its language appropriately.

Such is clearly not the case with the current bunch, which more and more looks like a collection of thin-skinned crybabies than the occupiers of the highest administrative perch in the land.

One of the latest examples comes from Macon Phillips at the White House blog. In a post that, except for the presence of expletives, reads more like something you might find at a far-left blog than as a thoughtful riposte, Phillips chooses to go after Edmunds.com, a leading car information and valuation site, for daring to claim, as noted yesterday by NewsBuster Julie Seymour, that the government spent about $24,000 for each incremental Cash for Clunkers sale while the program was in place.

Here are some excerpts from Phillips’s 12:20 p.m. October 29 post, including one assertion (bolded by me near the end) that he should have known better than to have made:

Busy Covering Car Sales on Mars, Edmunds.com Gets It Wrong (Again) on Cash for Clunkers

On the same day that we found out that motor vehicle output added 1.7% to economic growth in the third quarter – the largest contribution to quarterly growth in over a decade – Edmunds.com has released a faulty analysis suggesting that the Cash for Clunkers program had no meaningful impact on our economy or on overall auto sales. This is the latest of several critical “analyses” of the Cash for Clunkers program from Edmunds.com, which appear designed to grab headlines and get coverage on cable TV. Like many of their previous attempts, this latest claim doesn’t withstand even basic scrutiny.

The Edmunds analysis is based on two implausible assumptions:

1. The Edmunds’ analysis rests on the assumption that the market for cars that didn’t qualify for Cash for Clunkers was completely unaffected by this program.

In other words, all the other cars were being sold on Mars, while the rest of the country was caught up in the excitement of the Cash for Clunkers program.

…. 2. Edmunds also ignores the beneficial impact that the program will have on 4th Quarter GDP because automakers have ramped up their production to rebuild their depleted inventories.

Major automakers including GM, Ford, Honda and Chrysler all increased their production through the end of the year as a result of this program, which will help boost growth beyond the third quarter. The actions of private market participants, who would not increase production if they didn’t think demand for their product would be there through the end of the year, is a far better indicator of market dynamics – and one that Edmunds.com conveniently ignores.

Geez, Macon, a week earlier, an unbylined Associated Press report told us what the real results of the increased production you celebrate have been (bold is mine):

Spending on customer incentives like low-interest financing and rebates soared in October among auto manufacturers, according to the auto research Web site Edmunds.com, as carmakers seek to clear out old inventory that piled up after the Cash for Clunkers program ended.

Automakers ramped up their production in recent months in response to the wildly successful clunkers program. Now that sales have leveled off, inventories have piled up again and automakers are eager to clear dealer lots, Edmunds said. Luxury models and trucks are being discounted “particularly heavily,” Edmunds Senior Analyst Jessica Caldwell said.

General Motors Co. has been particularly aggressive in its incentive spending, offering zero-percent financing on several models.

I suppose the White House will now start going after Edmunds for reporting actual market observations. Or perhaps it will “suggest” that the wire service look elsewhere for “more reliable” car-market info. Or perhaps the AP will do so on its own to avoid making waves.

In terms of the current business situation — In a normally functioning vehicle market, manufacturers would be getting continued and more reliable market feedback on sales results and customer reactions not distorted by government largesse, and would be in better position to adjust their production levels to what’s happening out there on this planet, in this country. Instead, what appears to have happened is that the automakers, likely misled to an extent by an establishment press that touted C4C’s supposedly wild success (perpetuated by AP above) — and perhaps in the cases of government-controlled General Motors and Chrysler, pressure to ramp up recalls of laid-off employees — were temporarily transported to the Obamulan galaxy. In this unfamiliar faraway fantasy world, where actions appear to have no financial consequences, they interpreted the C4C’s results as a false signal that the vehicle market might be recovering more permanently and fired up the production lines. Now, having returned to earth, their heavy reliance on incentives strongly indicates that such is not the case.

If Macon’s analysis is reflective of the thought processes higher up the White House’s food chain, our economy is in the hands of people who are spending way too much time in another world that isn’t the one the rest of us are experiencing on the ground.

But getting back to fundamentals — Clearly, it’s not enough for Phillips to dispute the Edmunds analysis, which is of course subject to scrutiny like any other. From a position of perceived power as a de facto administration spokesperson, the White House blogger clearly made it a point to ridicule and disparage Edmunds, sending a clear message to anyone else considering dissenting from what the White House wants have framed as the conventional wisdom that they will be subjected to similar treatment.

This AP search on “Edmunds” (showing only the incentives-related item), meaning that the “Essential Global News Network” hasn’t deigned to take notice of Phillips’s heavyhandedness. How convenient. Way to speak truth to power and stand up for the little guy, AP.(/sarcasm).

The best establishment press coverage of the situation I found was at the Detroit News. Writer David Shepardson did a good job of analyzing the arguments, but dodged the issue of White House ridicule and intimidation.

If something like this had come from Bush 43′s White House, the cries of “stifling dissent” from the establishment media would have been loud and long. Though others have picked up the story, their coverage is far more muted compared to what we would likely have seen just a year ago.

Top image was obtained at this link.

Cross-posted at NewsBusters.org.



  1. [...] Bizzyblog review the sliming success of Cash-for-Clunkers: Bottomline is that each car ccost taxpaye… [...]

    Pingback by I’ve worked in the private sector. They expect results. « Temple of Mut — October 30, 2009 @ 4:11 pm

  2. It seems to me the current administration is totally convinced it is 100% right about everything and that is has not made mistakes nor that they will make them. Therefore even the the most minor critical scrutiny of them is subject to hysterical denunciations. The refuse to admit even the smallest warts. So, I’m not surprised that they have taken the tact of accusing everyone who disagrees with them of distortion and outright lying. You do not question the gods!

    Comment by zf — October 30, 2009 @ 5:18 pm

  3. and perhaps in the cases of government-controlled General Motors and Chrysler, pressure to ramp up recalls of laid-off employees — were temporarily transported to the Obamulan galaxy. In this unfamiliar faraway fantasy world, where actions appear to have no financial consequences, they interpreted the C4C’s results as a false signal that the vehicle market might be recovering more permanently and fired up the production lines

    Animal Spirits…it’s all about faking people into believing everything is now fine, spend, spend, spend. It’s just another version of the whisper campaign. The Animal Spirits theory fits perfectly with the liberal belief system. http://www.publiusforum.com/2009/05/19/another-example-of-central-planning-failure/

    Comment by dscott — October 31, 2009 @ 9:09 am

  4. BTW, all this is a distraction from a more important point: Before the C4C program was rolled out, they the Obama Admin through GM and Chrysler paired down the dealer network and in many cases dumped the best producers in their respective markets. There were charges of political favoritism which of course the MSM refused to cover. The C4C was nothing more than a political pay off for the remaining dealerships (Obama supporters), this is corruption at its most base level.

    Let’s look at this from a purely business standpoint regarding the dealerships and let’s disregard the fact most of the C4C was wasted. Why would you purge the dealerships first, transferring cars from disfavored ones and then do the C4C? It doesn’t make sense from a business point of view if the point of the C4C was merely to move cars during one particular period of time since the more dealerships meant there were more people hawking GM and Chrysler cars with the increased likelihood of moving more cars than fewer dealerships.

    Furthermore, the point of purging dealerships from a normal business point of view was the money in credit advances the car manufacturers would have saved for a “smaller” amount of cars sitting on the lot as a fixed cost of the total inventory needed to stock the collective dealership show rooms. That was not the point of the C4C since all those credits were already paid out by the manufacturers because of the dearth in sales. It would have been better to do the C4C FIRST, emptying the lots and then purge the lowest producers in their respective markets.

    Comment by dscott — October 31, 2009 @ 9:35 am

  5. #3 and #4, they know about animal spirits. I think Adam Smith mentioned them. It’s a valid concept behind why markets function. The point is that C4C manipulated them.

    Great point about doing C4C first, but they didn’t have time. Chrysler was losing $100 million a day. They said so in bankruptcy court.

    Comment by TBlumer — October 31, 2009 @ 1:46 pm

RSS feed for comments on this post.

Sorry, the comment form is closed at this time.