With the seemingly non-stop announcements of plant closures, shift eliminations and job cuts surrounding Detroit’s automakers, the local politicians are recognizing that, if left unchecked, the continued fall of the automakers will have disastrous consequences. As such, they trying to do something about it now, believing it will become much harder to do so later on.
Michigan’s congressional delegation is pushing for proposals that would include $27 billion over the next five years in federal loans, tax incentives and subsidies to Ford Motor Company, General Motors Corporation and Chrysler LLC. The chiefs of staff and top auto policy aides of the majority of the state’s 17 congressional delegation discussed policies to help the ailing automakers at a meeting on Friday, according to Detroit News reports.
Subsidies that cover one-third of carmakers’ losses, government-issued loans and bigger tax credits for the companies and consumers were discussed at the meeting. The proposal included $5 billion in direct loans over five years, $3 billion a year for five years to speed up the retirement of 1.5 million polluting vehicles and $2 billion in tax breaks for new, ultra-efficient vehicles. As well, $800 million was pledged over three years to develop an advanced battery trust fund that would help build three domestic battery manufacturing facilities as well as block California from imposing its own emissions standards.
Recently, presidential hopeful Senator Barack Obama has been reported to back a Congress plan to fund $25 billion in loan guarantees for automakers over five years in a second stimulus package under consideration for September. These loans would cost the Treasury $3.75 billion. Adding more pressure to automakers in these tough times are the government-mandated CAFE standards, which force automakers to increase the average fuel efficient of their cars by 40 percent by 2020. It is estimated that through the 2015 model year, automakers will have to spend $47 billion to meet these higher requirements.
