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Fox Business | US House Bill Would Cut Funding From Auto Maker Loan Program

June 1, 2011

US House Bill Would Cut Funding From Auto Maker Loan Program

By Josh Mitchel | Fox Business | June 1, 2011

WASHINGTON -(Dow Jones)- U.S. House Republicans are moving to cut $1.5 billion from a government program that provides loans for auto makers and redirect the funds toward disaster relief in the Midwest and South.

The measure faces opposition from some Democrats, who want disaster relief to come from new spending, not existing programs.

The measure, attached to a broad spending bill approved by the House Appropriations Committee last week, is expected to face a full House vote in coming days. The Senate would also have to pass the measure.

The bill draws funding from the Energy Department's Advanced Vehicles Technology Manufacturing program, created by a 2007 energy law, that issues low-cost loans to auto makers to develop and manufacture more fuel-efficient vehicles. Ford Motor Co. (F), Nissan Motor Co. Ltd. (NSANY) and Tesla Motors Inc. (TSLA) are among those that have received a total $8 billion in loans from the program. Chrysler Group LLC has applied for loans.

Enough funding remains to support an additional $11 billion in loans, an Energy Department spokeswoman said.

The House measure, sponsored by Rep. Robert Aderholt (R., Ala.), would redirect $1.5 billion from the program toward the Federal Emergency Management Agency's Disaster Relief Fund. FEMA has warned that the fund is running low, as the agency deals with the aftermath of historic flooding in the Mississippi, a storm system that killed hundreds in the South and the deadliest tornado in six decades, in Joplin, Mo.

A spokeswoman for House Appropriations Committee Chairman Harold Rogers (R., Ky.) said that even with the cuts, the auto-loan account would be able to support all existing applications for loans.

"Frankly there is no reason why the funding can't be taken from that account. The account has plenty of money," said the spokeswoman, Jennifer Hing.

But in a joint letter Tuesday, three House Democrats -- Rep. Henry Waxman of California, and Sandy Levin and John Dingell of Michigan -- urge Republican leaders to approve emergency funds for disaster victims while keeping the auto loan program intact.

"This program is critical to the competitiveness of the United States and supports the important goal of moving to clean energy in the automotive sector," the letter states.



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