Automakers Seek $50B In Loans From U.S.
Industry Wants Help To Modernize Assembly Plants, Develop Fuel-Efficient Vehicles
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Automakers plan to urge Congress to provide the industry with $50 billion in low-interest loans to help modernize assembly plants and develop fuel-efficient cars. (AP Photo/Gary Malerba)
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Industry officials said the loans, which are twice the amount authorized in last year's energy bill, are a top priority when Congress returns next month because of the declining fortunes of Detroit's automakers and tightening credit markets.
"The amount of concern and urgency from the Detroit companies has increased in the last month and significantly ratcheted up what they're communicating what their funding needs are," said Alan Reuther, legislative director for the United Auto Workers union.
Congress authorized $25 billion in low-interest loans in last year's energy bill, but the auto industry's allies in Congress have been unable to get funding for the plan.
The loans would provide low-interest credit for up to 30 percent of the cost of retooling facilities to build hybrids, plug-in hybrids, electric cars and other alternatives.
Detroit's automakers have struggled this year amid a sluggish economy and consumers shunning large sport utility vehicles and trucks because of high fuel prices. General Motors Corp. reported a second-quarter loss of $15.5 billion and Ford Motor Co. reported an $8.7 billion loss.
The auto industry's future has been a top issue in Midwest battleground states key to the presidential race. Sen. John McCain had opposed the retooling efforts, arguing that his $5,000 tax credits for consumers who buy fuel-efficient vehicles and a $300 million battery prize would accomplish the same goal.
But in a statement released Friday, the Arizona Republican said Congress should fund the loan program in the energy bill: "I believe we should fund it and take action that will assist Detroit and its suppliers in making it through this difficult time of transition."
Douglas Holtz-Eakin, McCain's top economic adviser, said the conditions had declined for auto companies seeking access to capital. "It's a common sense response to the realities on the ground," he said.
Democrat Barack Obama previously outlined support for the loans, and a 10-year, $150 billion program for green manufacturing. Obama's campaign said Friday they would support the $50 billion loan program.
Auto industry officials have argued that the loan program would not represent a bailout, but would be similar to aid lawmakers have given to Wall Street investment banks and struggling mortgage firms. They also note that auto companies face tens of billions of dollars in costs from new fuel economy regulations.
"We don't see it as a bailout. We see it as government assistance to help retooling tied to the production of these advanced technology vehicles," Reuther said.
Congress would need to appropriate $3.75 billion to provide up to $25 billion in low-interest loans to car companies and their suppliers, according to a July 25 letter to House Democratic leaders.
The plan, which is still being discussed, calls for $25 billion in loans to be available in the first year, followed by an additional $15 billion in the second year and $10 billion in the third year, industry officials said. To activate the full $50 billion in loans, Congress would need to set aside about $7.5 billion to guard against a loan default.
GM and Ford spokesmen declined to comment on whether their companies would be pushing Congress to raise the loan limit, but expressed support for the program.
The loans in the energy bill showed how "government policy can be aligned with consumer demand and the efforts of the industry," said GM spokesman Greg Martin.
Mike Moran, a Ford spokesman, agreed: "Congress created a program for direct loans and we're hopeful that they can fund those this year."
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See all 80 CommentsIt''s pretty *** bad when you want to borrow from those already in debt up over their azzes.
Who is left paying the difference? The American tax payer, Mr. Cowardly himself.
Screw big oil and the companies that are in bed with them including big government and big banks.
"Screw big oil and the companies that are in bed with them including big government and big banks."
How to screw them when we have a nation of cowards?
The US government has given over 100 billion dollars to Israel since 1949. We are talking about one of the wealthiest nations on earth, ranking number 1 in the world for millionaires per capita.
Corporate America to the citizens:
Thank you for all the personal sacrafices of:
Doing without health care
Working more for less money
Going without a raise
Paying triple price for gasoline
Paying double price for groceries
Training foreign workers to take your job
Sending your children to a profitable war
Paying for the war
Being cowardly citizens
Without all your continuing support, we could not buy out luxury yachts, sports cars, resort homes, etc...
We thank you from the bottom of our wallets. We hope that our relationship always remains the same.
"For the corporation and by the corporation"? Not!
Seems they forgot that their job is to represent the real PEOPLE.
The tax payer is not a bank. Obama is and will be the social worker for the corps. WE will be slaves for them in exchanged for our low pay and no health care.
Welcomed to the new world order of bizz. And of course he is not voted in but Americans cant seem to think for themselves again and again....
You dont have to vote for him or McCain they both are losers and i suggest you look to Dr Paul and you better hurry cause time is running out...
Anther 4 yrs of hell and the debt is unpayable. The dollar is worthless and you all better get Gold Or Silver before the crash
First taxpayers bail out the incompetent airlines and are screwed with $25 baggage fees; what will our taxpayer money get in return for bailing out the 3 stooges ... GM, Ford, and Chrysler.
Other bloggers put it best. Corporate welfare for failed CEOs. This folks is the Republican dream for America .. Reagan started it and Bush/Cheney has perfected it ... when are voters going to throw these immoral, corrupt politiciams out and vote in a party that will extract real benefits for Americans for our tax-payer supplied subsidies. If they can grab our money then corporations must be made to provide living wages and healthcare.
"When are voters going to throw these immoral, corrupt politicians out and vote in a party that will extract real benefits for Americans for our tax-payer supplied subsidies."
Herein lies the problem folks. Don''t hand your power over to a political party.
This is the same as poking your own eyes out and asking someone to lead you around.
Can''t you see this America? No, you can''t, for you have already blinded yourself, preferring to be lead instead of leading your self.
The solution will come when we stand up and demand the right to vote on issues facing the nation. No longer allowing politicians to vote our consciences.
Only then will the nation be of the people, for the people and by the people.
I believe the government already props up that industry. Anything to keep oil-guzzling airplanes in the air burning more oil to keep oil profits flowing. God knows all those kickbacks from the oil lobby to the crooked Congress has made sure we have no fuel-efficient train infrastructure in this country, and it''s taken decades to get Congress to approve higher fuel standards too.
At least they''re talking "loans" here that presumably would be repaid, not that I''m holding my breath. Frankly, this is tax money better spent than more handouts to oil companies to "increase production" and generate "alternative fuels." After years of tax breaks to big oil, we see just how effective that government handout has been. And sadly this is all McCain has to offer with his energy plan--more handouts to oil companies who he claims will drill, while strangely enough they''re already sitting on millions of acres of unused oil leases, effectively keeping production low and driving prices up. It doesn''t take a rocket scientist to figure out who he''s really trying to help, and it''s not the people.
It''s the greedy fools at the helm that are the problem.
"Congress has made sure we have no fuel-efficient train infrastructure in this country, and it''''s taken decades to get Congress to approve higher fuel standards too."
This problem first cropped up back in the early seventies and our leaders have had over thirty years to solve it.
Thanks, Mr. Politician, for stabbing the American citizen in the back.
If we''re going to loan them the money, we should have some say in what kind of cars they build.
Why did Toyota choose to build a 45mpg car, and GM did not?
Posted by drivelphobe
Unfortunately all of the bucks stop with them. Regardless of how poorly they run the company.
All of the taxpayer''s bucks will stop with them too.
Isn''t that the same amount they spent on advertisements convincing Americans that without an gas-guzzling SUV they weren''t real, independent Americans. (the kind with a daily need to cross a swollen mountain stream). For a while there, it seemed on TV that if you didn''t own an SUV you were probably a hippy and possibly ''rooting'' for the terrorists.
They layed off Detroit, without concern for the lives of the people they threw away, why should we have any concern for them?
Modernize and build factories in the US only, don''t pay for a slave labor factory in China.
If Toyota and Nissan can build auto plants in the USA and operate at a profit, why cannot Ford and the rest of the domestic car companies do likewise?
Trying to convince Americans that we could burn oil like there was no tomorrow indefinitely. Talk about swallowing their own Kool-aid. Let the automakers go Japanese. Labor will do just fine, it makes no difference to them WHO owns the company. Its just all the investors in Ford, GM, etc that will lose their shirts... and deserve to.
Hey get to work and build some good cars!
No Welfare for Lazy automakers!
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It appears to me that the US automakers are trying to hold us hostage here.
While Toyota and Honda were developing hybrids and fuel cells, Detroit kept cranking out pickups muscle cars and SUVs because of their enhanced profit potential.
And now that their greed has led to their suffering, they want a bailout.
No.
Let them earn their success like all businesses have to.
Posted by ubrew12 at 04:29 PM : Aug 23, 2008
I agree.
I think American taxpayers money is better spent buying the peace in Iraq!
Hey Gen Betrayus, give those Islamist warlords and Jihadists some more of them good old American greenbacks!
Great War Strategy!
If you can''t beat them, pay them!
To which McCain says:
"My Friends, the surge is working!"
LOL
I say we call and write all of congress and let them know where tax payers and tax payer votes come from.
"I say we call and write all of congress and let them know where tax payers and tax payer votes come from."
Like they really care. Vote one out, another comes in.
That stipulation applies as easily to Toyota and Honda as it does Ford and GM. As far as I''m concerned, Ford and GM blew it, knew the consequences, and its ''game over'' for them. Their autoworkers can make the move to Toyota and Honda, and potentially get paid more for moving. But, lets admit, that Ford, GM, etc MAY just be looking for a way to blame the government for massive layoffs. They misread their customers and now must pay the price. That''s capitalism. But, NOOOO, they want to make it look like the gov''t didn''t step in and help them out of the deep doo-doo they stepped in with eyes open.
Regards the space program, consider this: every day, the earth absorbs more solar energy over her surface than human civilization has used in ALL of her 100,000 year history. Yet the earth itself only absorbs 1% or less of ALL the energy the sun puts out, every day. This means that any space-bearing civilization gets an immediate ticket to the future of humanity, from a power perspective. The action, as they say, IS in space, cuz that''s where the power is.
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There''s nothing "amazing" about it. The average guy has learned that buying American cars is simply not a good thing. If we want top qulity, great mileage, etc... - WE BUY JAPANESE! Simple! What part of this do you refuse to understand?
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