U.S. automakers are expected this week to ratchet up their campaign for $50 billion in low-cost government loans for themselves and their suppliers. General Motors Corp., Ford Motor Co. and Chrysler LLC say they need the money to fund research aimed at meeting Congress-mandated fuel economy standards and argue that the loans will benefit the U.S. by reducing fuel consumption and lessening America's dependence on foreign oil.
Congress already authorized $25 billion in loans last year, but that program is in limbo awaiting startup funding and Department of Energy guidelines for granting loans. Automakers arguing for a doubling of the program say that since last year the industry has fallen into a deep sales slump, leaving little cash available for R&D.
It is unclear whether the generosity shown toward Fannie and Freddie will help or hurt the automakers' cause. It is of course an election year, and Michigan appears to be a key battleground state. Compared to the $100 billion offered for housing, perhaps the extra $25 billion to automakers will look like a drop in the bucket to lawmakers.
But the auto giants have to be worried about potential backlash from those critical of lavish government spending, and about fiscally conservative politicians seeking a bailout they can brag about blocking while on the campaign trail. Opponents of the loans note that foreign rivals such as Toyota Motor Corp. and Honda Motor Co. Ltd. have developed strong hybrid programs without government assistance, proving to some it can be done off of the government dime.
Longtime Detroit gadfly and presidential candidate Ralph Nader lambasted the cry for help, blaming the automakers' situation on poor decision-making and saying "the taxpayer should not be played for a sucker."
Chances are election year pandering wins out and something is done for the Big Three before Congress heads back to their home districts. But auto execs are surely watching closely the public reaction to the Fannie and Freddie actions from over the weekend, and refining their arguments in favor of assistance based on the feedback they are hearing. - Lou Whiteman
See Detroit News story on the automakers' campaign for help
See Detroit News story with Nader's comments
See Dealwatch: Autos
Now that Fannie Mae and Freddie Mac have secured their government bailouts, attention is turning to some other industries hopeful to tap Uncle Sam for cash.
