Ford Motor Company was supposed to be the only major U.S. automaker not in need of a bailout, but this week Ford accepted a $5.9 billion loan subsidy under the Energy Independence and Security Act of 2007 (EISA). The EISA loan is designed to help the auto industry by supporting “capital investments in facilities designed to produce vehicles with greater fuel efficiency and reduced emissions.”

It’s not a “bailout,” Ford executives would likely argue, on the basis that the money is a loan. But would Ford have been able to obtain the same amount of money and the same interest rate in the free market? To what extent is the loan (the difference between the government-provided loan and what the free market would offer) a subsidy? Undoubtedly, a $5.4 billion infusion of cash from already tapped-out taxpayers for doing what Ford was presumably already doing with their business model won't hurt their cash flow. And coming in a tough year for the auto industry, it was probably even more welcomed.

The Department of Energy also announced loans the same day to Nissan North America ($1.6 billion) and the start-up U.S. auto company Tesla Motors ($454 million), which specializes in electric vehicles.

The loans come out of the $25 billion EISA loan program, which would be doubled by the American Clean Energy and Security Act of 2009, a bill now pending in Congress.

The news that all of the “big three” U.S.-based automakers are receiving assistance from the U.S. government is disheartening news. With the U.S. government already being the prime stockholder in both Chrysler and General Motors, should we be surprised if the government were to muscle in on Ford operations, using the billions Ford now owes the government as leverage?

The line between “private enterprise” and “government enterprise” is blurring daily under the administration of Barack Obama and his compliant Congress.

Photo: AP Images
 

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Clint said:

... The line between “private enterprise” and “government enterprise” is blurring daily under the administration of Barack Obama and his compliant Congress. Why should we be surpised? This has been slowing going on since FDR.

June 25, 2009

Robert Coleman said:

Mr This program was available in 2008 to ALL US Manufacturers. Currently 21 companies have participated(met the criteria). None of the big 3 at the time were capable of applying based on the requirements of the feds. So now that FoMoCo has become leaner and greener and now qualify you are condemning that and comparing them to GM and Chrysler? How biased and incompetent is the reporter who wrote this article only reporting edited versions of the whole story. I bet you agree 100% with Michael Moore's version of the state of our healthcare vs Cuba in "Sicko". Come on, give us all a break and do your job!

June 25, 2009

cheezymom5 said:

Print the Truth Tom! Key provisions are: * Energy security Increased CAFE standards. Automakers are required to boost gas mileage to 35 mpg by 2020. This applies to all passenger automobiles". Required vehicle technology and electrification. Incentives for the development of plug-in hybrids. New conservation requirements for federal vehicle fleets. Taxpayer funding for increased production of biofuels. The total amount of biofuels added to gasoline is required to increase to 36 billion gallons by 2022. * Energy savings Revised standards for appliances and lighting. + Requires roughly 25 percent greater efficiency for light bulbs. This effectively bans the sale of incandescent light bulbs. + Requires roughly 200 percent greater efficiency for light bulbs. o New initiatives for promoting conservation in buildings and industry. o Requires all lighting in Federal buildings to use Energy Star products. o New standards and grants for promoting efficiency in government and public institutions. All new federal buildings must be "carbon-neutral" by 2030. * Funding of research and development of solar energy, geothermal energy, and marine and hydrokinetic renewable energy technologies. * Green jobs - creation of a training program for "Energy efficiency and renewable energy workers". * Energy transportation and infrastructure. New initiatives for highway, sea and railroad infrastructure. * Small business energy programs, offering small businesses loans toward energy efficiency improvements. * Smart grid - modernization of the electricity grid to improve reliability and efficiency. * Pool safety - new federal standards for drain covers and pool barriers.

June 25, 2009