Groups back auto industry loans

David Shepardson / Detroit News Washington Bureau
WASHINGTON -- Direct loans to the auto industry drew additional support Wednesday from two influential groups, the United Auto Workers and the National Association of Manufacturers.

UAW President Ron Gettelfinger said he is optimistic Congress will approve at least $25 billion in low-cost government loans for the auto industry to retool plants.

"There's a lot of jockeying back and forth," Gettelfinger said. "We're hopeful that the loan guarantees will be passed."

Advertisement

So is the National Association of Manufacturers.

"The challenges facing the auto industry to transition to more fuel efficient vehicles will be costly and difficult," said NAM President and former Michigan Gov. John Engler. "The NAM believes the federal loans are in the nation's interest and require prompt action by Congress."

Sen. Barack Obama, the Democratic presidential nominee, has endorsed $50 billion in direct loans for automakers over three years, while his Republican rival Sen. John McCain supports $25 billion -- the amount that was authorized, but not funded -- in the energy bill passed in December 2007 that increased fuel efficiency standards by 40 percent.

Automakers and Michigan legislators think the best route is to attach funding for the $25 billion to a bill to fund the continuing operations of government, though some high-level auto executives in Detroit are still pushing for $50 billion this year and more flexiblity in what they could spend the direct loans on.

The loans would sharply reduce borrowing costs for Detroit's Big Three automakers, which have sub-investment grade credit ratings and must pay double-digit interest -- dubbed "credit-card interest" by Rep. Candice Miller, R-Harrison Township. The loans would save them more than $100 million for every $1 billion borrowed and the government could defer repayment for up to five years.

Gettelfinger said he's headed to Washington to testify on Capitol Hill Sept. 24 on trade policy.

The UAW president, whose union has endorsed Obama, also used a conference call with reporters to criticize McCain on his varied comments about who bought a Toyota Prius for his daughter, Meghan.

McCain last year reportedly said he bought the Prius, but last week told a Detroit TV station that he thought his daughter paid for it. Gettelfinger said he thought the change in statements was a "credibility issue."

McCain drives a Cadillac CTS.

A spokeswoman for McCain on Wednesday declined to directly address the question of who paid for the Prius