Advanced Vehicle Manufacturing, Another Bush-Era Jobs Program, Is GOP Leaders’ No. 1 Target

Advanced Technology Vehicle Manufacturing Program Is Putting Americans to Work, Producing Cleaner Cars

ATVM chart

by Daniel J. Weiss, Valeri Vasquez

Congressional Republican leaders have been fairly silent about President Barack Obama’s American Jobs Act proposal to put people back to work despite the stalled economy. But even more discouraging is that they plan to undermine an existing program that employs thousands of Americans in the auto sector. They propose to slash $1.5 billion from the Advanced Technology Vehicles Manufacturing program—signed into law and first funded under President George W. Bush—to pay for disaster relief. Helping Americans suffering from economic damages caused by extreme weather—the storms, floods, and droughts linked to climate change—should be a top priority. But chopping this program would compound economic harm by hurting American manufacturing plants and eradicating tens of thousands of jobs as companies retool to build more efficient vehicles for the future.

The Energy Independence and Security Act of 2007 included the Advanced Technology Vehicle Manufacturing program to help auto companies and their suppliers convert their domestic plants to produce more fuel-efficient vehicles and to create or maintain auto industry jobs. It provided direct loans to help them retool their facilities or build new ones to make parts or build vehicles that are at least 25 percent more efficient than cars in 2005. They must achieve a fuel economy of 34.4 MPG.

In 2008 Congress passed and President Bush signed into law $7.5 billion of credit subsidies to support $25 billion of loans to promote the production of energy-efficient advanced vehicles and component parts. Since then the Department of Energy has used approximately $5 billion of credit subsidies to provide $9.1 billion in loans to five companies, which created nearly 39,000 direct jobs and another 2,600 construction jobs in 11 states. (see chart above) The projects would reduce gasoline use by more than 311 million gallons annually.

Jonathan Silver, executive director of the Loan Programs Office at the Department of Energy, testified about the Advanced Technology Vehicle Manufacturing program before the Senate Energy Committee this past June. He reminded senators that the program’s loans must be repaid and described the rigorous loan application review process:

We review projects on a competitive basis, and … ensure that the loans we support meet our statutory requirement of having a reasonable prospect of repayment. Every project that receives financing must first go through a rigorous financial, legal and technical review process – similar to … what a private sector lender would conduct – before a single dollar of taxpayer money is put to work.

The programs can efficiently and effectively leverage government resources to spur private-sector investment. The financing provided by the loan programs is ‘additive’ … a relatively small amount of appropriated credit subsidy can support large amounts of new private sector investment.

In addition to improvements in fuel economy, ATVM Loan Program projects promote economic growth and job creation. They create construction and permanent operating jobs in manufacturing communities where job growth has long been stagnant.

A February 2011 Government Accountability Office assessment of the Advanced Technology Vehicle Manufacturing program found that the program is generally working and has appropriate financial oversight mechanisms in place:

In making its first loans, the ATVM program has injected significant funds into the U.S. automotive industry for promoting improved fuel efficiency of conventional vehicles and encouraging the development of vehicles with newer technologies that rely less, or not at all, on petroleum.

According to our calculations, the projects for enhanced conventional vehicles as a whole are expected to achieve fuel economy that exceeds the CAFE [Corporate Average Fuel Economy] targets by, on average, 21 percent.

The Advanced Technology Vehicle Manufacturing program has about one-third of its loan volume remaining. DOE is expected to use another $2.5 billion of credit subsidies to support additional loans by the end of 2011. House Appropriations Committee Ranking Democratic Member Norm Dicks (D-WA) noted that “an additional 18 loan applications in progress that are projected to create 50 – 60,000 jobs.” These loans would create direct jobs in Florida, Illinois, Indiana, Louisiana, Michigan, and Ohio at construction companies and parts suppliers throughout the Southeast and Midwest.

The Congressional Republican leadership, however, has other ideas. They plan to hack $1.5 billion from ATVM to pay for the damages from extreme weather. They would shift these funds from ATVM to the Federal Emergency Management Administration, or FEMA, and other agencies in the temporary continuing resolution for fiscal year 2012 that will keep the government running while Congress and President Obama negotiate final spending bills for the remainder of the year. It makes little sense to help Americans harmed by extreme weather disasters by cutting investments in auto sector manufacturing jobs.

The American economy experienced zero net job growth in August 2011, which makes job creation extremely important across the land. The Advanced Technology Vehicle Manufacturing program has a proven record of loaning money to auto companies to help them retool their factories to build more fuel-efficient vehicles that will reduce oil use, thereby helping our balance of trade. And these investments create tens of thousands of direct jobs. It’s difficult to understand why congressional leaders would slash this employment-generating program—unless they were no longer interested in holding their jobs.

You can find the original post at the CAP website.

— Daniel J. Weiss is a Senior Fellow and Valeri Vasquez is a Special Assistant for Energy at the Center for American Progress. Thanks to Steve Spinner, Senior Fellow at the Center.

10 Responses to Advanced Vehicle Manufacturing, Another Bush-Era Jobs Program, Is GOP Leaders’ No. 1 Target

  1. Sasparilla says:

    “It’s difficult to understand why congressional leaders would slash this employment-generating program”

    Actually this is easy. The GOP is now at war with anything green and plug-in vehicles in particular (the plug-in angle isn’t new they’ve hated them since they rolled out) – this is according to the Koch’s direction. Much of these projects have to do with getting the US off oil to some extent – not what the GOP’s Don’s (Koch brothers) want.

    Here’s a taste of what they do to plug-ins:

    You can see that the GOP has recently changed its strategy with green technology to direct attacks now, instead of just ignoring it (seems killing off the climate bill only emboldened them) with its propaganda outlets recent drumbeats to this effect on solar cell manufacturers as an example.

    This sad example of the GOP trying to defund this worthwhile program is to be expected now – this is the new normal – total war on all green tech.

    Plug-in vehicles represent a long term threat to oil company profits as well as a road block to pouring huge amounts of money into natural gas vehicles and infrastructure.

    If the GOP sweeps all three branches in 2012 I’d expect every green technology support from the federal government to be destroyed within a month of taking office (in the name of fiscal austerity of course).

    Its amazing how far we’ve fallen in 3 years – going from expected serious action on climate change to action being decisively defeated and absolute defeats on all sectors of climate action and now beyond that to total war on all green technologies at the Federal Level by the GOP.

  2. The_Woodwose says:

    Hmmm, $9.1 billion divided by 41,720 (the higher jobs estimate listed) means these jobs building cars that no one needs or wants is costing us at a minimum $218,000 apiece. And why the hell are we loaning money to profitable companies like Ford or Nissan? If this kind of work is such a sure-fired way to dominate the future of automotive manufacturing the government sure as hell shouldn’t be taxing everyone to decide who gets loans. These companies need to invest their own damn money or find their own investors. This stupid program has Solyndra written all over it. Pull the plug now.

  3. Mark Shapiro says:

    Sasparilla –

    It’s always difficult to watch a clip from “Fox News”.

    So many of them provide evidence that Rupert Murdoch is a wealthy, powerful, dangerous psychopath. He sells fear and hatred, and damages many people around the world without a care.

    How powerful? An Australian born American citizen, he has so much power in Britain, that his paper’s illegal hacking of cell phones was ignored until after one victim was the family of a murdered little girl. An editor became PM Cameron’s trusted lieutenant.

    How dangerous? Ask Dr. Tiller’s family. Bill O’Reilly fomented his murder. Listen to Glenn Beck.

    These harsh words are difficult to write, but it is important to understand one’s world.

  4. Mark Shapiro says:

    Does our good Woodwose get nearly as concerned about the 100s of billions in annual subsidies to other industries? To the billions in direct subsidies to the oil biz? To the huge, incalculable, indirect subsidies that pollution extracts from our health and climate?

    I don’t know.

  5. Mike#22 says:

    Oh well, guess we’ll be buying our cars from China.

  6. Mulga Mumblebrain says:

    Sasparilla, it’s just the same in Australia. The Right detests every single thing that can in any way be linked to environmentalism. They do this, I think, because they are wedded, to the very core of their identity, to the concept that life and greedy self-interest are entirely congruent categories. They refuse to accept, or accept the right of others to so think or act, that life can have any other purpose than the greedy pursuit of wealth. There are pretty transparent psychopathological reasons why the Right so covet material possessions, to do with fear of death and feelings of inner worthlessness, which we may pass over. So they hate Greenies viscerally, and the language of this detestation is uninhibited. This vilification, like much else that is rancorous and downright nasty, is led by Murdoch’s News Corpse, which simply serves as a sewer through which anti-Green hatred and vilification flow, unchecked.
    We have had two significant changes in state politics here in the last year, with ‘Liberal’ regimes elected in the two most populous states, New South Wales and Victoria. As is now the electoral norm, these parties posed as ‘moderate’, as having left behind the hard Right policies of earlier ‘Liberal’ regimes in those states and the Howard abomination federally. Naturally, once in power, the mask has been dropped and they have governed as ferociously anti-labour and anti-environmental regimes, the Victorians, in particular, bent on turning the environmental clock back decades. For the Right in this country, with the Labor Party having sold out to the money power years ago, the sole obstacle left between them and their neo-feudal, soft totalitarian, Nirvana is the Greens, whose policies are still, naturally, of the Left, as there is no such thing as a Rightwing environmentalist. The Right has vowed, openly in News Corpse’s case, to ‘destroy’ the Greens, a sure sign of what they really mean by ‘democracy’.

  7. Mulga Mumblebrain says:

    Mark, what you say is true, and the barest scratching at the surface of the evil of Murdochism. However, Murdoch and his minions are but symptoms of the core malady, market capitalism, a system that creates, empowers and rewards Murdochs, big and little, everywhere and everywhen it operates.

  8. Sasparilla says:

    I’d have to disagree there Woodwose – these are loans, not grants. They go for projects that radically reduce oil consumption in the US. Most of them are a great bet and good for getting our country off that fuel that sends money to Hugo Chavez and our Saudi Arabian friends – that’s a conservative cause.

  9. Sasparilla says:

    Mark, you are right on target. I was really stunned for several minutes after watching that first one – hard to even comprehend it.

  10. Sasparilla says:

    Mike, I don’t think its as bad as it sounds – the GOP is trying to hack off $1.5 billion of the last $2.5 billion left. Most of these loans, I believe, are already done (hopefully the money was handed over for all of them) – its only new ones, in process, that would be affected.

    Nissan’s factory, for example, for the Leaf EV down in TN will be done and running in 2012 (much of it is completed) and they will make nearly everything here in the US.

    Hopefully the plug in tax credit survives the 2012 elections.