House Budget Plan Includes Auto Industry Loans

Lawmakers said Tuesday a House budget plan expected to be considered by Congress includes funding for $25 billion in loans for Detroit's automakers.

WASHINGTON (AP) -- A House budget plan expected to be considered by Congress includes funding for $25 billion in loans for Detroit's automakers, congressional officials said Tuesday.

Rep. David Obey, D-Wis., who leads the House Appropriations Committee, said funding for the loan program would be included in a stopgap spending bill to keep the government running after Congress recesses for the election. The bill is expected to be considered this week.

General Motors Corp., Ford Motor Co., and Chrysler LLC have pressed for the loans to help the industry modernize assembly plants and build more fuel-efficient vehicles. Auto executives lobbied for the loans last week on Capitol Hill.

Obey said he was "not a fan of the American auto industry, and I'm not a fan of this provision." But he noted that Congress had authorized the loans, which will require $7.5 billion in appropriations, in last year's energy bill.

Obey said modest adjustments would be made to help speed up the loan program but there would not be changes to bring more flexibility to the program. Automakers want the loans to be applied to a broader number of vehicles and fuel-saving technologies.

Sen. Carl Levin, D-Mich., said in a statement that the funding "should help to keep auto jobs in Michigan and in the U.S. and begin moving us toward the advanced vehicle technologies that are critical to our companies' competitiveness in the global market place."

Levin called it a "long and hard bipartisan effort by the Michigan delegation to obtain funding for government loans."

Congress authorized $25 billion in loans in last year's energy bill but has not funded the plan. Lawmakers included the loans in the bill to help auto companies and their suppliers meet new fuel-efficiency standards of at least 35 miles per gallon by 2020, a 40 percent increase.

Since the energy law was signed, the Detroit car companies have struggled with a weakened economy, limited access to credit and declining sales.

The government interest rate for the loans would be about 5 percent, providing about $100 million a year in savings for every $1 billion the companies received in loans. The companies have poor bond ratings, meaning they would only qualify for double-digit interest rates on the open market.

Associated Press Writer Andrew Taylor contributed to this report.

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