Auto Makers Back to Original $25 billion

[dollardaze]

There have been recent reports of the Auto Makers in the U.S. asking the government for twice the amount of loans that they were promised last year. The original plan was for the auto makers to get $25 billion in loans from the government at reduced interest rates towards gearing the auto plants up for more energy-efficient vehicles.

The auto makers said that they needed more than the $25 billion to re-vamp their plants and then began asking the government for $50 billion. Now, since the government let Lehman Bros. file for bankruptcy protection rather than bailing out the investment bank, the auto makers decided that they'd be better off getting the original $25 billion than fighting for twice that amount.

The auto makers are trying to get this money appropriated and finalize the rules for qualifying projects before Congress recesses. Treasury Secretary Henry Paulson has indicated that the government is setting limits on saving companies that are in trouble, so the auto manufacturers are feeling even more pressure to get this money appropriated quickly. The auto makers are quick to say that this is not a bailout in their case, but that these are loans which will be paid back.

The promised $25 billion in loans was promised as a part of last year's energy bill which mandates that fuel-efficiency standards to 35 miles per gallon on average be achieved by the year 2020, with the financing aimed at helping the plants convert for the production of more fuel-efficient cars, and other fuel-efficiency products as hybrid batteries.

Obtaining money from Congress is a 3-step process with the first already being accomplished when legislation was passed to set the program up. Next, the money must be appropriated, with the government having to commit $7.5 billion to cover the costs of the program, (this is double the amount that was originally estimated due to the current economy). The last step is having a government agency write rules which will implement the program, determining what qualifies the auto makers to receive the backing. The auto makers are pushing to get steps 2 and 3 done at the same time, in order to finish the process before Congress recesses.

One analyst said that there's at least a 50% chance that the auto makers will get the loans, due to the 100,000 blue-collar jobs that could be saved with these loans.

[moneysense]

Is it just me or is there something wrong with this picture?
There are already cars on the market, made in the US that get that kind of gas mileage, so just make more of them.

Maybe I tend to oversimplify things, but cutting out production of gas hogging large pick up trucks, and SUVs and making more of the cars that already get the great mileage would seem to me to be the way to go.

Why so much money? It seems redundant to me, and they will be saving 100,000 blue collar jobs with this loan. No, that isnt right, what about all the other workers that have lost jobs etc because of plants closing etc?

It seems that everytime someone needs large amounts of money from the government that it helps out the people that are already making the big bucks.

Then, We the people, get taxed more and more.