To pay for Hurricane Irene relief, House Majority Leader Eric Cantor wanted budget cuts. Democrats didn’t. But Cantor (R-Va.) might have found a cut that could be difficult for them to say no to. The House’s stopgap bill to fund the government after Sept. 30 contains a $1.5 billion offset for disaster relief, targeting a fuel-efficiency loan program that one House Republican has compared to government’s support for the ill-fated Solyndra.
The House’s stopgap budget proposes a $1.5 billion cut to the Advanced Technology Vehicle Manufacturing loan program to help pay for $3.5 billion in additional disaster relief funds. The ATVM program was originally created by President Bush and Congress to lend auto companies money to help improve their fuel economy, setting a target of $25 billion in loans and giving the program $7.5 billion in credit subsidies — the estimated long-term net cost to the government. So far, the program has spent a little less than half its credit subsidy fund, using $3.5 billion to guarantee loans for both auto giants and start-ups. Ford received a $5.9 billion loan to help develop a fuel-efficient, “EcoBoost” engine; Nissan got a $1.45 billion loan to develop the LEAF electric car and electric battery packs; Fisker received $529 million to develop two plug-in hybrids, and Tesla was given a $465 million loan to open up a new electric-vehicle factory.
The House GOP had developed an amendment to cut funding for the fuel-efficiency loan program in June. But the proposal has gained new force in light of the scandal surrounding Solyndra, the bankrupt solar company that received a similar federal loan guarantee through the stimulus. Florida GOP Rep. Cliff Stearns, chair of oversight for the House Energy and Commerce who held Wednesday’s hearing on Solyndra, criticized the ATVM loans for posing similar risks. “I think we have other Solyndras out there,” he told the New York Times this week. “The government should not be picking winners and losers — that’s what they’re doing with Nissan, Tesla and Fisker...They’re at risk in an global open competitive market.”
Stearns, to be sure, didn’t connect Solyndra directly to the House Republicans’ disaster aid offset. But the implicit parallels could shore up support for that offset on the right. Republicans have criticized Solyndra as a failed stimulus initiative; they similarly say the ATVM funds were originally designated as “emergency” funding intended to be stimulative under Bush. “If it was really a true emergency, it wouldn’t have taken three years to spend less than half the money,” said one Republican aide — a criticism that echoes Cantor’s attack on the program yesterday.
Democrats, for their part, describe the fuel-efficiency program as a job creator, citing ATVM staff’s analysis that the program will have created or saved 37,800 jobs through its loans to Ford, Nissan, Fisker, and Tesla alone. But that funding cut might not stop some leading Democrats from backing the larger bill. Rep. Norm Dicks (D-Wash.), ranking Democratic member of the Appropriations Committee, criticized the offset for “pit[ting] disaster funding against other important budget priorities” and said jobs would be at risk by cutting the ATVM program’s funding. But Dicks ultimately said he would support the CR in the name of moving forward with Congress’ agenda. “He doesn’t want to tie it up with another big budget fight,” says Ryan Nickel, Dicks’ press secretary.
But a bigger battle over disaster aid funding could still be on the horizon. On Thursday, the Senate passed a $7 billion bill with no offsets, which some Republicans broke ranks to support. Senate Democrats are now pushing the House to take up their bill and drop their demand for offsets. Reid’s office emphasizes that the fight is over the very principal of offsetting emergency aid rather than any specific funding cuts — to the ATVM program or otherwise. “When emergency strikes, we need to get money to quickly as possible. The debates over offsets — that’s a political debate. We don’t have time for that,” says Adam Jentleson, spokesman for Senate Majority Leader Harry Reid.