This week the House of Representatives plans to vote on a continuing resolution for fiscal year 2012, H. J. Res 79, to fund the government from October 1 to November 18 while Congress debates and passes comprehensive spending bills for all of FY 2012. The CR includes “a total of $3.65 billion in disaster relief funding to provide much-needed assistance to the thousands of people affected by Hurricane Irene, recent wildfires, the devastating floods and tornados in the Midwest and South, the Mid-Atlantic earthquake, and other natural disasters.” This is partly funded, however, by robbing $1.5 billion from the Advanced Technology Vehicle Manufacturing loan program. It is run by the Department of Energy and provides loans to auto and part supplier companies to help them retool their factories to produce significantly more efficient cars.
Providing assistance to the families and businesses harmed by recent disasters is essential for their lives and our economy. Unfortunately, stripping funds from ATVM would hurt employment. The ATVM loans to six companies have already created up to 42,000 jobs. Taking some of the unspent funds from ATVM for disaster relief shouldn’t affect these loans but it will make it impossible to fund the 18 pending loan applications worth a total investment of $9.8 billion and cost up to 43,500 jobs.
Of the 18 applications, Department of Energy information provided by sources on Capitol Hill indicates that six pending loan applications are in “late-stage term sheet negotiations” with an “estimated date of conditional commitment” expected “this fall.” These are the loans closest to finalization. These applications seek $5.6 billion in loans for these advanced battery, diesel, and hybrid van projects. The six projects could be announced by the end of the year but now may not be funded.
In addition, there are another dozen proposals without a commitment or in the “due diligence” phase that would provide a total of $4.6 billion of loans for investment in retooling for clean vehicle projects. Removing funds from the ATVM program would make it near impossible to provide loans for these projects should they pass muster.
The DOE information does not list the pending applicant companies or their home cities, but it does include the states where these investments would occur. They are California (3 applications), Florida, Indiana (2), Louisiana, Michigan (5), Missouri (2), Ohio, and “multiple” states (2). In other words, these loans would provide a significant boost to manufacturing in the Midwest, Southeast, and California.
The DOE information provided by Capitol Hill sources does not include the number of jobs created by these pending applications. If the job creation result is the same for the pending projects as the ATVM loans already issued, however, then the loan applications that are near completion would create an estimated 25,000 jobs. Those that are still in the due diligence phase and would not receive loans would create another 20,000 jobs. In other words, transferring funds away from ATVM would cost the economy up to 45,000 manufacturing jobs.
Rep. Gary Peters (D-MI) argued that helping communities affected by natural or climate disasters should not prevent assistance for areas damaged by the economic downturn. He stated, “We should fund recovery efforts in Eric Cantor’s District [Virginia], but not at the expense of programs designed to address the economic disaster that hit Michigan and other manufacturing states.”
In addition, defunding investment in automotive advanced technology would benefit foreign auto manufacturing facilities at the expense of domestic plants. Sen. Debbie Stabenow (D-MI), the creator of the ATVM program, noted that the proposed CR “would drive advanced technology jobs overseas.”
Further, many of the disaster funds would go to help people suffering from floods, storms, and other types of extreme weather linked to climate change. Cutting funding for advanced vehicles that would produce less carbon dioxide pollution to pay for extreme weather disaster relief is like cutting funds for Smokey the Bear’s fire prevention campaign to pay for forest fire damage.
The transfer of $1.5 billion in loan authority to disaster relief would end the program by the end of the year, terminating those applications not in final form. This is both unprofessional and unfair to companies that filed applications in good faith to a federal program specifically designed to help such companies build these facilities and create jobs. The cut would abandon these communities at the time they need the most help.
Daniel J. Weiss is a Senior Fellow and the Director of Climate Strategy at American Progress.