One way or
another, the Energy Department’s direct loan program for
fuel-efficient car manufacturers looks destined for the chopping
Once viewed as
a lifeline for Detroit’s “Big Three” manufacturers facing economic
headwinds even before the onset of the Great Recession, the
program is now little more than a kitty of untapped funds
appropriated a decade ago. The last major Advanced Technology
Vehicles Manufacturing program loan was approved conditionally in
2015, but Arconic Inc., whose former parent Alcoa secured the loan
to produce lightweight vehicle materials at its Tennessee plant,
turned the money down last year.
No new loans
have closed since 2011, and with $4.33 billion sitting around
unspent, the Trump administration wants to “rescind,” or cancel,
the vehicle loan funds permanently. The House is set to consider a
measure that would drain the loan account and 37 other line items
— $15.2 billion in all — likely next week. The path is trickier in
the Senate; despite procedural protections expected to lower the
vote threshold to a simple majority, few if any Democrats are
expected to support the bill, and some Republicans are wavering as
Energy and Natural Resources Chairwoman Lisa
Murkowski, lack of interest in new loans means there’s no
longer a need for the money. “I have said before that I don’t have
a problem with the rescission of the ATVM because you’ve got a
program that hasn’t done anything for seven years now. So for me,
that makes sense,” the Alaska Republican said late last week.
A problem for
lawmakers, however, is that the unspent funds — provided as a
“subsidy appropriation” in 2008 to cover the potential cost of
anticipated defaults — represent a pool of money to offset other
Two of the
original program’s boosters, Michigan Democratic Sens. Debbie
Stabenow and Gary
Peters, sought to use some of the money in 2016 to clean up
contaminated water supplies in Flint, Michigan. They successfully
incorporated a bipartisan provision to pay for the costs by
phasing out the loan program by Oct. 1, 2020, in an early version
of that year’s water resources authorization bill, though the
offset was stripped before the measure became law.
Stabenow and Peters did not respond to requests for comment.
When a group of
GOP senators in 2016 tried to attach the same phaseout provision,
though without Flint funding, during amendment debate on the
fiscal 2017 Energy-Water spending bill, the effort was defeated on
a narrow 48-49 vote.
Republicans, including Murkowski, joined all Democrats save Claire
McCaskill of Missouri to oppose the
effort. Senate Energy-Water Appropriations Subcommittee Chairman Lamar
Alexander, with the Alcoa loan pending, also opposed the GOP
amendment at the time. His office did not respond to
requests for comment.
Republicans have made no secret of their desire to cut the
program, even if mainly to offset other spending. In 2011,
Congress approved a stopgap funding bill that included $2.65
billion in emergency aid for various natural disasters that year.
Initially, the House passed a version rescinding $1.5 billion from
the vehicle loan program to cover much of that cost, but the
offset was stripped in final House-Senate bargaining.
Just last year,
House Republicans approved an initial fiscal 2018 omnibus bill in
September that cut $1.97 billion from the loan program, in order
to keep the measure within its nondefense appropriations cap for
the year. That was up from $1.09 billion in the committee-reported
version of the State-Foreign Operations bill, after Republicans
came back from the August recess and decided that after a
devastating hurricane season they didn’t want to take $876 million
from the Federal Emergency Management Agency’s Disaster Relief
Fund, as the initial Homeland Security title would have.
program was signed into law as part of a sweeping energy bill in
late 2007 with headline provisions generating support from both
sides of the aisle.
fuel economy requirements and the modern iteration of the
Renewable Fuel Standard biofuels mandate united progressive
coastal Democrats and corn-state Republicans. There were energy
efficient appliance and lighting standards, oil and gas tax
breaks, and even a title devoted to pool and spa safety.
And yes, there
was the infamous ATVM program, authorized to disburse up to $25
billion in direct loans to eligible beneficiaries. The measure
passed the Democratic-controlled House and Senate, racking up big
bipartisan margins, including half of the House Republicans voting
that day in late December, and was signed by President George W.
wasn’t funded, however, until the following year, when Congress
appropriated $7.5 billion to cover possible costs, representing 30
percent of the outstanding principal that lawmakers thought loan
recipients might be unable to pay back.
ultimately had its share of setbacks — out of a $529 million loan
to Fisker Automotive in 2011, the Energy Department had to eat
$139 million, and it took a $42 million loss on a $50 million loan
to the Vehicle Production Group LLC the following year.
But three other
loans have shown no signs of strain thus far, including a $5.9
billion loan extended to Ford Motor Co. that the carmaker is
expected to pay off in about four years. Tesla may be having
difficulties of late, but it paid back a $465 million ATVM loan
nine years early in 2013. The estimated subsidy rate for the
program, or the expectation of losses, had dropped to 3.4 percent
by 2015, according to the Congressional Research Service, meaning
that for every $100 in loans the government could expect to lose
If no one wants
the loans, why keep the money set aside? That’s the question many
have been asking, including the nonpartisan Government
Accountability Office, which has said since 2014 that “Congress
may wish to consider rescinding all or part of the remaining $4.3
billion in credit subsidy appropriations.”
groups have largely praised the proposal to rescind the vehicle
loan funds, even while noting its limited impact on the deficit —
$100 million in actual savings over the next 11 years, according
to the Congressional Budget Office.
“Given the ATVM
program’s inherent risky nature and poor track record, its demise
is overdue and would prevent future losses to taxpayers,”
Taxpayers for Common Sense said in a statement. The group said the
proposal “is low-hanging fruit that others have suggested for
years, but it represents a good cut that would end a needlessly
organizations have largely kept quiet so far on the proposed ATVM
rescission this year, even influential industry groups that have
opposed similar efforts in the past.
the U.S. Chamber of Commerce and the National Association of
Manufacturers joined most Democrats in opposing the potential
$1.5 billion cut in 2011.
It’s unclear if
support has waned now that the money has essentially been lying
around unspent for years. Recently, some advocates have even
called for expanding the program. Mitch Bainwol, president and CEO
of the Alliance of Automobile Manufacturers, told the Senate
Energy and Natural Resources Committee in 2016 that his group
supports broadening the ATVM program to allow medium- and
heavy-duty truck manufacturers to qualify for loans.
loan funds could be used to lower the cost of spending bills later
this year is an open question. The CBO generally won’t give
lawmakers credit for offsetting regular discretionary spending
with emergency-designated funds, as the ATVM funds were back in
In its cost
estimate for the new rescission bill, the CBO noted specifically
that the vehicle loan money, as well as $523 million in remaining
budget authority for Title 17 “innovative technology” loans, can’t
be used to offset regular appropriations for that reason.
A Senate GOP
aide said that since emergency-designated funding doesn’t count
going out the door, it should not count coming back in, noting the
goal is to prevent gaming the appropriations process to increase
But as the CBO
also made clear in its score of the House-passed omnibus last
September, when the Budget committees direct them to score a bill
a certain way, they comply. As described by a person familiar with
the process, House GOP appropriators approached the Budget
Committee seeking flexibility to offset spending in the 12-bill
spending package. House Budget Committee staff ran the idea by
Senate Budget staff, and no objections were raised.
That led to
House Budget staff directing CBO to incorporate the offset in its
score. Though the Budget committees are the official scorekeepers
under budget law, the panels almost always accept CBO cost
estimates. Nevertheless, CBO scores are ultimately advisory. The
committees can and occasionally do modify or influence the scores.
panels rarely direct scoring, and when it takes place, it is
typically part of a collaborative process where the committees in
both chambers are in agreement. Nonetheless, last year’s
experience means that if appropriators are looking for a
relatively uncontroversial offset during fiscal 2019
appropriations season, they have precedent to tap the ATVM program
once again. Or if disaster strikes again this summer, the money
would also be available without having to jump through
But first, the
vehicle loan program would have to survive the latest rescissions
process. And that is no guarantee at this point.
Dillon contributed to this report.