While the Bush administration still doesn’t favour the idea of supporting the Detroit car companies, in a letter sent to UAW workers on Friday, Sen. Barack Obama endorsed Michigan’s congressional Democrats are pushing for $4 billion in aid to the U.S. auto industry as part of a second economic stimulus bill. According to Detroit Free Press, Obama and other congressional Democrats have said they even consider a second stimulus plan in September that could reach $50 billion.
“America cannot truly prosper unless Michigan prospers [..] By providing tax credits and loan guarantees for our automakers and by expanding consumer tax incentives for ultraefficient vehicles, I will provide real solutions necessary to help this industry compete and win in the global economy,” Obama said in the letter to UAW members released by his campaign.
In a letter to Senate Majority Leader Harry Reid, Michigan’s two Democratic senators urged Reid to include $3.75 billion in funding for loans, which could provide up to $25 billion that automakers and parts suppliers could use for revamping old factories and engineering new models. The loans would be made directly from the U.S. Treasury to automakers at below-market interest rates. The funding would cover the government’s borrowing costs. Sens. Debbie Stabenow and Carl Levin also asked Reid to include $250 million for research into advanced batteries.
Sen. John McCain on the other hand, is against this loan program, as his campaign says his proposals, which include $5,000 consumer tax credit for buying efficient vehicles, $300-million prize for electric vehicle batteries and strict goals for building flexible-fuel models, would accomplish the same thing.
The UAW, which has endorsed Obama, has pushed the loan program for some time as a way to give Detroit automakers aid without the specter of a government bailout. Last year’s energy bill authorized the loans, but provided no funding for them after Republicans blocked a tax measure that would have paid for the program. Automakers have been lukewarm to the idea in the past, but as all three face the worst market in decades, they’ve warmed to the idea.