$25 billion in auto loans passes the U.S. House

WASHINGTON — Late Wednesday afternoon, the U.S. House overwhelming passed a budget bill that approves up to $25 billion in low-interest loans for the auto industry by a 370-58 vote. The Senate is set to follow suit on Friday, and the White House is expected to sign the bill that funds through March 6 the continuing operation of government.

Automakers scored a big victory, when congressional leaders agreed to help speed up the timetable for the low-interest government loans to help the auto industry retool to build more advanced fuel-efficient vehicles. In language inserted late Tuesday night, the U.S. Energy Department must issue its final rules for the loan program within 60 days of becoming law.

The program was authorized by the energy bill approved in December, but not funded. Because Detroit’s Big Three automakers have sub-investment grade credit, they face 20 percent interest rates to borrow money without these loans. Automakers will be able to save more than $100 million in borrowing costs per $1 billion borrowed.

Automakers will be able to repay loans over as much as 25 years and the Energy Department will be able to defer repayment for up to five years.

Michigan members of Congress hailed the news, saying it would help retain thousands of auto jobs.

Rep. Fred Upton, R-St. Joseph, said the vote “culminates a Herculean effort to boost the industry and protect Michigan jobs and create new ones.”

“This loan program helps protect those jobs and plants the seeds to create new ones. Make no mistake, these loans are an investment in Michigan’s automakers and suppliers, and an investment in Michigan’s workers — these loans will not be a burden to American taxpayers, they will be paid back in full with interest,” he said.

Another boost for the automakers cleared the Senate just yesterday:

Separately, a tax bill cleared the Senate Tuesday that includes a provision for new tax credits for plug-in electric vehicles, ranging from $2,500 to $7,500, for vehicles such as the Chevrolet Volt.

After watching so many friends lose their jobs in the auto industry here in Michigan, and eventually everything that they owned, this ‘victory’ is a little bittersweet for me personally. One friend lost his white-collar auto industry job just this past July. He and his family lived under enormous stress — as did others — waiting to find out if he would be one of an announced group to receive pink slips. He was an immigrant from the Ukraine, and the loss of his job would surely mean deportation for him, his wife, and their two small children. He died of a massive heart attack in August, one month to the day after receiving his pink slip.

I hope the Energy Department will move quickly on the details of these loans, and possibly spare the state another round of job losses and plant closures.