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Question: Should Detroit Get $50B to Go Green?

Question: Should Detroit Get $50B to Go Green?

By Marty Padgett's avatar Marty PadgettMarty Padgett September 8th, 2008

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The domestic auto industry, personified, might look like a cash-strapped American facing a mortgage foreclosure. Does that mean the U.S. government should step in ease the pain?

The industry, mainly Ford and GM (Chrysler LLC has been privately held since last year), claims it does not want a handout as it tries to stay afloat--instead, it's said to be lobbying hard for low-interest loans to spur growth and development of fuel-efficient hybrids like the Chevy Volt, plant retooling, and new technologies that will make it competitive again and, therefore, drive sales upward.

Fitting right in with election season politics, the industry leaders cite the stakes and fortunes of the American worker, insinuating that a lack of help is tantamount to the government turning its back on its own families and industry.

Currently, Ford and GM hybrids are skewed toward SUVs like the Ford Escape Hybrid, Chevy Tahoe/Cadillac Escalade two-mode hybrids, Dodge Durango/Chrysler Aspen two-mode hybrids, and mild hybrid sedans such as the Chevy Malibu hybrid. Of note, none of these models can boast the frugality of Toyota's Prius or even Camry Hybrid, though the Escape Hybrid comes close.

Specifically, the domestic industry is asking for $50 billion in loans at a low 4 to 5 percent interest rate over a three-year period. Because their credit ratings have fallen "below investment grade," according to The Detroit News, neither Ford nor GM can borrow money at affordable rates. Rep. Joe Knollenberg, R-Mich, says, "Something has to happen pretty quickly because they can't compete paying 15 to 20 percent."

Is Detroit playing the victim--or is this a chance for Americans to put their tax dollars where it will make some good? Let us know how you feel in a comment below. Jeep American FlagEnlarge PhotoThe domestic auto industry, personified, might look like a cash-strapped American facing a mortgage foreclosure. Does that mean the U.S. government should step in ease the pain? The industry, mainly Ford and GM (Chrysler LLC has been privately held since last year), claims it does not want a handout as it tries to stay afloat--instead, it's said to be lobbying hard for low-interest loans to spur growth and development of fuel-efficient hybrids like the Chevy Volt, plant retooling, and new technologies that will make it competitive again and, therefore, drive sales upward. Fitting right in with election season politics, the industry leaders cite the stakes and fortunes of the American worker, insinuating that a lack of help is tantamount to the government turning its back on its own families and industry. Currently, Ford and GM hybrids are skewed toward SUVs like the Ford Escape Hybrid, Chevy Tahoe/Cadillac Escalade two-mode hybrids, Dodge Durango/Chrysler Aspen two-mode hybrids, and mild hybrid sedans such as the Chevy Malibu hybrid. Of note, none of these models can boast the frugality of Toyota's Prius or even Camry Hybrid, though the Escape Hybrid comes close. Specifically, the domestic industry is asking for $50 billion in loans at a low 4 to 5 percent interest rate over a three-year period. Because their credit ratings have fallen "below investment grade," according to The Detroit News, neither Ford nor GM can borrow money at affordable rates. Rep. Joe Knollenberg, R-Mich, says, "Something has to happen pretty quickly because they can't compete paying 15 to 20 percent." Is Detroit playing the victim--or is this a chance for Americans to put their tax dollars where it will make some good? Let us know how you feel in a comment below.

Tags: Industry, Politics, General Motors

Posted in: 2008, Ford, Hybrid, Green



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Responses (6 total)

  1. By Ed #1, Posted: 9/8/2008

    Answer: ABSOLUTELY NOT.
    over my dead body!
    It is sickening to see these serial incompetents, who have been losing HOME GAMES 30 years in a row, trying to rape the e taxpayer again!

  2. By Andy #2, Posted: 9/8/2008

    no

  3. By Tom L #3, Posted: 9/8/2008

    I say no. It's not the Fed's job to bail out companies. The fed needs to use its influence in the form of tax law and regulation to create a stable environment in which the strong businesses can survive, not give hand outs to the weak. How much of those hand-outs are going to end up as executive bonuses?

  4. By Tony D #4, Posted: 9/8/2008

    Fanny Mae and Freddie Mac not only got hand - outs, the got their hands held. Fired the dudes in charge, and put the government in charge. Offer that deal to Detroit, see how bad they want it then.

  5. By GILBERT YSAIS #5, Posted: 9/9/2008

    NO WAY................ALL THREE COMPANIES AND IN FINANCIAL TROUBLE AND READY TO GO UNDER....
    KEEP THE AMERICAN TAXPAYER OUT OF IT.

  6. By Carl Lindell #6, Posted: 9/9/2008

    Yes,it is time our country wakes up. Remember Kennedy's inaugeral speach, "Ask not what your country can do for you, ask what you can do for your country."
    No body seems to think on the larger scale of what the American Automobile Industry represents to this country. If we should become involed in a major land war. Will we ask Japan, Germany and Korea to build our trucks, tanks and armored vehicles, etc.
    People claim the plants built here are American plants who employ American labor. They are not American companies, and that is the difference. When the Japanese and German and Korean companies have to compete with the Chinese, these factories will likely go to a more competitive country for labor, and you won't have a big three to pay part of the tax burden we all must carry.
    Additionally, we let the Japanese companies come into our country with tax incentives to build their plants here. They have had a significant competitive advantage over GM, Ford and Chrysler in the amount "not" budgeted for health care and pension costs per car.
    I am so sick of people still talking negatively about the quality of GM products, who haven't driven a new GM vehicle in years. They call this conviction prior to investigation. That is simply ignor-ance. The experts (our car magazines) continue to voice positive reviews and grant awards for GM's new vehicles.Let's wake up.
    By the way, I remember back in the early 70's when the price of gas was high and people bought small Japanese imports for their teenagers and as 2nd cars. The car magazines reported these cars as having a sub par quality compared to American cars. But people bought more of them over the years and because of this, more money was available to invest in research & development "quality".
    The Bottom line: quit bad mouthing America's car companies. Who do you think you are ultimately hurting anyway????? If you don't "think" the new vehicles are as good, even though the automobile journalists now say they are, buy one anyway. They will then have more dollar's to invest in research & development "quality".
    Yes, our dollar votes worked this way in the 70's for Japanese cars, and our dollar vote will work the same way for GM, for and Chrysler.
    Well,it's time to pay the piper for our selfish self-centered dollar votes for Japanese, German and Korean vehicles.
    If we want a country, we can do it directly by purchasing vehicles from our companies or indirectly with loans and subsidies.
    By the way, we are not realy buying a car or granting a loan, we are investing in our country's competitivness, it's economic future and survival.

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