Congress Outlines $25B Green Car Rescue

The ailing US auto industry could soon receive a major shot in the arm in the form of $25bn in low interest loans from the federal government, designed to help manufacturers meet new fuel efficiency standards and accelerate the development of low carbon vehicles.

According to Reuters' reports, Congressional Democratic leaders have expressed their support for the proposal with House of Representative Speaker Nancy Pelosi describing the low interest loans package as "very important to our country".

Under the proposals, major manufacturers such as Ford, GM and Chrysler would be eligible for credit assistance as they seek to shift production from the gas-guzzling SUVs and trucks that have represented their cash cow for much of the last decade, to more vehicles capable of meeting recently introduced standards that require an improvement in fuel efficiency of 40 per cent by 2020.

Read the full story here

Related:

::Steve Parker: $50 Billion For The Detroit Three: Yea Or Nay?
::Ford CEO Thinks Congress Will Loan Automakers $50 Billion

Comments

[JXJASON]

General Motors, Ford, and Chrysler and their management and unions, got them into the mess they are in.

It seems to me that everyone who screwed up is going to be bailed out by those of us who did not screw up. IS THIS WHAT WE CALL DEMOCRACY???

The screwups should pay for the problems they created.

John McCain is one of the screwups...and Sarah WHO???hasn't a clue what to do about it either.

OBAMA / BIDEN 08

[jacobomorales]

all that they are going to do with the $ is to pay management's parachutes and later when they go under the taxpayer will be left holding the bag.

If they did nothing during the last 30 yrs, what makes anyone think they will do anything now? Look at their attempt in the Volt. $40K starting price...and only seats 2 people, that is "innovation"!!!

I paid 21K for a Honda Civic Hybrid and get 50 per gallon regularly, now you tell me, who has the consumer in mind, Honda or GM?

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[hypnotoad72]

GM once had an electric car design (okay, that WAS 1969) but Ford, right now, sells 65MPH vehicles in the UK. Sell them here.

[proreality]

Help us! We only had 30 years since the gas embargoes to figure out how to compete.
Help us! We only had 30 years to produce competitive vehicles.
Help us! We only had 30 years of profits to line our pockets with.
Help us! We fought fuel efficiency standards for 30 years and now the US is last in the world.
Help us! We didn't learn the first time and just kept building bigger and bigger.
Help us! We build competive vehicles in other markets but refuse to sell them in the US.
Help us! We killed our electric car and lost our advantage.
Help us! We paid our executives glutenous saleries and now we don't have any money.
Help us! We mismanaged our companies and need taxes that we don't pay our fair share of.
Help us! We speculated the price of oil to high and hurt ourselves
Help us! We spent billions buying politicians and now we need some of that back.

It is not called communism. IT IS FASCISM! WAKE UP!

[asus389]

They should *only* do this if its contingent on 100% Zero emmission technologies (ie electric) that is also backed by 100% renewable energy sources (ie solar, wind, nuclear). It would be the crime of the century for the feds to loan the US automakers 25Bn to get to 35mpg with regular cars. And if they did it, it should be revenue neutral, funded by a gas guzzler tax to encourage people to switch.

[Bettysdad]

Back during WW2 FDR got the best execs to work for $1.00/year to win the war. The almost instantaneous ramp-up and production of the US manufacturing is one of the greatest and truly amazing stories of the time.

We're at war to solve our energy problems.

Let's have the top 100 execs (related directly to the auto biz, not HR or IT, etc.) at each company work for that buck a year, and the next 400 cut their pay in half in exchange for these loans.

I'm sure these guys wear flag pins and think they're very patriotic. Let's see how much of a sacrifice they'll make for America.

[UnbiasView]

So your solution is to force government to make people work for $1.00 per year . . .

[hypnotoad72]

In 1940, $1/hr was more than TWICE minimum wage.

I'll even do some research for you:
http://kclibrary.lonestar.edu/decade40.html

Note the national debt compared to the minimum wage... $43B compared national debt to 43 cents per hour as minimum wage. More proof the 1940s were more humane. Oddly.

[Bettysdad]

Yes, my point is to make the people who have destroyed America's industrial might and are now asking for MY money to fix their own damage work for a buck a year.

I realize you have trouble comprehending, but I did say execs.

[KillTheMessenger]

WW II was nothing compared to satisfying the world's energy problems. In any case, the war in Europe was mostly won due to the human sacrifices of the Russians.

To look at a structural economic problem as parallel to war shows a real misunderstanding of both wars and economics.

Not sure what your problem with executives is. Are you pissed that they are making more than you do? Too bad. But that's your personal emotional baggage. It has nothing to do with the problem at hand.

It might help if you think hard about WHO causes the energy problems in the first place. It's YOU, the consumer. Start saving energy and most of these problems will basically go away or become a lot easier to solve. And let's see how much of a patriot you are if I ask you to consume HALF as much energy as you do.

[Bettysdad]

Thanks for explaining WW2.

Thanks for pontificating about something that isn't even there.

Thanks for pointing out my emotional baggage which exists only through your preconceived theories.

Thanks for your challenge about patriotism.

Thanks so much for everything.

I'm so shamed and humbled, I'll just go cry.

[mamacat]

If we are going to bail out the mega-corporations again, how about they pay us back by giving the government stock in themselves? Assuming that they turn their business models around and become profitable someday, we could get repaid and make a profit to boot. A win-win-win situation. Corporations, workers, and taxpayers all get something.

[tres hugger]

I agree! Furthermore, it should be an inescapable debt. I think it should also be linked to their industry/profit structure - namely, roads. The auto industry should pay the loan back with inputs that repair, maintain, create highways. While I'm at it, I suggest that the oil industry be forced to tow the line here too. Their windfall profits should be taxed and put those tax revenues against roads too. Why should tax payers have to pay to support the roads that are the foundation of the profits of these two industries?

You can LUMP coal producers in there too, seeing as the Volt (et al) will shift energy burden from oil to coal as electrical consumption from electric vehicles drives it. Most electricity is generated from coal (in the US).

[DRaymond]

Ok, what I want to know is what do we get for fronting these low-interest loan?

Do we get high mileage vehicles? I can already buy them from other companies,

De we boost 'american' companies? So? Honda, Toyota, etc all have manufacturing plants in the US While Ford, GM, and Chrysler do nearly all of their North American small car manufacturing in Mexico.

So we are supposed to loan billions of dollars to Ford and GM so they can expand their plants in Mexico to build the cars that they are already selling in Europe? Get your lons from Mexico if that is the case!

[research]

How about using that 25B for tax credit for people who BUY efficient cars.

This is more corporate bailout.

[NL207]

How about Congress keeping its nose out of this and not sepnding other people's money at all?

Since when should Congress provide $25B in tax revenues for the automakers OR for people who choose to buy some particular make or model of car?

[Bettysdad]

Why should the govt give tax deductions for the costs of running a business?

I don't get any deductions for going to work.

[KillTheMessenger]

"How about Congress keeping its nose out of this and not sepnding other people's money at all?"

Cool. We stop taxing you and then there won't be any roads, any schools, any electricity grid, any phone system, there will be no internet, no medical research. The best there will be are small scale farms and people trying to stay alive by subsistence farming.

What a great world that would be.

[JBS]

Comment system seems to be on the fritz again. There's supposed to be 34 comments here and now 1 pending comment, but all I see is the "Post a Comment" box.

[DXM]

While I understand the importance of maintaining the US manufacturing base, there is a piece of me that is very bothered by giving loan guarantees to a bunch of corporations that failed to reinvest their profits when they had them while lavishing their key decision-makers with obscenely huge compensation packages. The free marketeer in me says let these US automakers sink and to hell with the shareholders that allowed this to happen. And if we do bail them out, we better have a say in how these companies are run and how the benefits of their recovery are distributed (e.g. much more for the employees who are actually doing the work, more for future research, less return for the shareholders, and much less compensation for corporate officers - possibly tied directly to employee pay).

[ErnestineBass]

Hear! Hear!

Double rations for those actually rowing the boat, and half rations for the clown sitting in the back barking orders! 8-D

[mamacat]

I am a big fan of making CEO pay dependent on employee pay. After all, these guys are more like bureaucrats than businessmen, since they had to fight their way up the corporate ladder, not start a business.

Something along the lines of setting a limit of 4 times the average full time worker's wage, unless specifically approved and renewed each year by stockholders, with a set legal maximum for any and all corporate officers who were not part of the corporation when it was founded.

The recent example of the CEO of Exxon paying himself $440 million in 2005, while underfunding the employee pension fund, should be more than enough to spur real reform (aka change). Of course, since most of the Republicans are on the payroll of Big Oil lobbyists to the point of obscenity, that will never happen.

[EspressoAtNoon]

Yeah, let's pour all this money into these multinational corporations so they can continue to move their plants and outsource jobs to foreign countries, and eventually flee America to countries with low corporate tax rates.

These companies are NOT American. They operate wherever it benefits their shareholders, and we should treat them as such.

And if we do give them loans we should make the contingencies very high. They should HAVE to create these new vehicles in the US, and their fuel efficiency requirements should be extremely high.

If our government is to provide corporate welfare they should INSIST it guarantees direct benefits to the American worker and huge improvement in fuel efficiency and in reducing carbon. None of this 30 MPG crap. Make it hybrid/fuel cell 50 MPG requirements.

[KillTheMessenger]

"and eventually flee America to countries with low corporate tax rates."

The US has some of the lowest effective corporate tax rates in the world. If I had to start a business somewhere, I would start it in the US.

"If our government is to provide corporate welfare they should INSIST it guarantees direct benefits to the American worker and huge improvement in fuel efficiency and in reducing carbon."

You realize that's not what this is about? It's all about providing means for GM and Ford to continue to do the same old same old.

Americans are a bunch of born losers. They are setting themselves up to lose and then they complain that everyone else wins.

[EspressoAtNoon]

"The US has some of the lowest effective corporate tax rates in the world. If I had to start a business somewhere, I would start it in the US."
- then why are corporations fleeing to the caymen islands? http://www.jamaicaobserver.com/magazines/Business/html/20080801T010000-0500_138516_OBS_CARIBBEAN_TAX_HAVENS_UNDER_ATTACK_IN_US_SENATE_.asp

"Americans are a bunch of born losers. They are setting themselves up to lose and then they complain that everyone else wins."
- No, American workers are losing, because you can hire 12 software engineers in India for the price of one American Software Engineer. This has nothing to do with superiority - it has everything to do with fattening profit margins by finding low wage countries and countries that offer free healthcare for all their citizens. Ontario has more GM workers then Michigan because they provide GM's employees with free health insurance.

[DuganS1]

The US has some of the highest effective corporate tax rates in the world. And many Republicans and Democrats (like NY Senator Barney Frank) are trying to get corporate tax rates lowered to stimulate more investment here in the US.

[Erdgeist]

Manufacturing is the basis on an economy--not financial markets. At least GM, Ford and the rest provided real jobs and made real things. Financial markets only make recessions and depressions.

[ErnestineBass]

"Manufacturing is the basis of an economy-".

True, but the way I see it, producing gas guzzlers isn't much different from growing opium poppies. The business model for both is based on exploiting a destructive addiction.

[EinChicago]

You need to grow up and let the grown ups talk. Without manufacturing, teh economy collapses. Nobody really cares about what your particular pet fetishes are regarding teh rest.

[Tom95134]

So let me get this right... GM may be able to get a loan from the government to develop new technology vehicles. I wonder why GM would need such a loan since they appear to have a lot of spare cash setting around. Or maybe you haven't heard about the $10 billion dollar loan they just gave to Delphi.

Someone will have to show me the logic in this.

[KillTheMessenger]

GM has outsourced most of its part production to Delphi. If Delphi folds, GM can't produce cars. It's a matter of a house of cards collapsing from the single weakest point. And that would be Delphi.

[DuganS1]

What do you mean GM "has outsourced most its part production to Delphi?" Delphi used to be part of General Motors until it was spun off in the mid-90s.