Rough road

Distressed US auto giants have accelerated their drive for $50 billion in low interest government-backed loans, with time running out to consider legislation and other priorities stacking up.

Ford Motor Co, General Motors Corp, and Chrysler Group boosted efforts recently to "educate" lawmakers returning from the August recess on the need for help retooling factories and developing technologies to meet a government-mandated increase in vehicle fuel efficiency that would boost US energy independence.

"There's a rare window where you have a policy that aligns very well with a number of goals," says Greg Martin, a spokesman for GM. "The energy security goals, automotive technology, will play a key role."

Martin says government-backed loans would help automakers keep plans on track for making hybrids, electric vehicles and other efficient cars "consumers want to buy".

But the auto industry expects the task to be a "heavy lift" with Congress also expected to consider energy legislation, military spending, and billions of dollars in emergency highway funding in coming weeks.

Also unclear is whether the blockbuster announcement a week ago Sunday by the Bush administration to seize and invest an initial $1 billion apiece into mortgage giants Freddie Mac and Fannie Mae will help their cause or focus lawmakers on the growing tab for government rescues.

A major challenge, say congressional and industry insiders, is finding a legislative track to ensure passage before lawmakers return to the campaign trail at September's end.

Lawmakers, mainly from Michigan where US automakers are based, have reached out to the White House for support but the Bush administration has said little publicly on the plan that automotive leaders refuse to call a bailout.

To meet provisions in the 2007 federal energy law for making more fuel efficient vehicles, Congress authorized backing for up to $25 billion in low interest loans to help automakers and suppliers access credit they cannot get now because of poor finances.

But Congress must first approve $3.8 billion in taxpayer funds to cover default insurance for those loans. And the Energy Department must put in place a regulatory framework for administering the program. Congress did not demand the Energy Department act until December.

The industry is also looking for another $25 billion in loans not covered in any existing legislation but deemed necessary by Detroit due to the sharper-than-expected falloff in domestic auto sales and the sluggish US economy.

It's an acknowledgment of the need for retooling and a need for capital," Senator Debbie Stabenow, a Michigan Democrat, told Reuters in a recent interview. "We have a limited amount of time and it will take a strong bipartisan effort."

Lobbyists are pressing for passage by September 30, the end of the government's fiscal year and when Congress is due to leave town and resume campaigning ahead of the November 4 election.

In addition to presidential balloting, all seats in the House of Representatives and a third of the Senate are in play.

Both presidential candidates, Democrat Barack Obama and Republican John McCain, support help for automakers. In addition to Michigan, Ohio and Indiana are states with strong ties to the auto industry that are considered battlegrounds in the White House race.

It is unclear if Congress will reconvene after the election and the prevailing thinking among industry insiders and supporters is that waiting for the next presidential administration to settle into office in 2009 could push the loan initiative off until next spring or summer.

"I think everyone is trying to figure out whether there will be a lame duck (post-election) session and what's going to be moving," says an industry lobbyist involved in discussions and planning. "Even the easiest things don't always move quickly. We're hoping it does."

Peter Morici, an economist and business professor at the University of Maryland, believes Sunday's Fannie/Freddie takeover will help automakers' in this case and that presidential politics will factor into the decision the same way it did ahead of the election in 1980 when Washington bailed out Chrysler with loan guarantees.

"It got less uphill last night," Morici says of the automakers' chances. "Right now, Congress is in the mood to write checks. We bailed out the banks."

Agencies

(China Daily 09/15/2008 page11)