Obama Wants $2 Billion In Advanced Vehicle R&D Funding

President Barack Obama wants Congress to approve the use of oil exploration royalties to provide $2 billion of funding for the research and development of advanced vehicle technologies. This funding is for a ten-year period.

The research mentioned is for the development of electric vehicle, biofuel, battery, and compressed natural gas technology. The development of battery technology is important to both electric vehicles, as well as the electricity grid, and the entire effort to switch to renewable energy sources such as solar and wind power.

The idea was proposed by Obama in the State of the Union address to obtain a share of the money obtained from leasing federal land to oil and gas companies (the royalties I mentioned above) for use in an ”Energy Security Trust” fund. In the past, Congress approved roughly half of the $650 million that Obama wanted them to provide for electric vehicle and battery research, suggesting that they are not quite as enthusiastic about that as him.

One of Obama’s most significant contributors to his environmental conservation efforts has been the development of electric vehicle and power plant battery technology, as well as the development of solar panel technology. However, his goal for putting 1 million electric vehicles on America’s roads by 2015 will almost certainly fall short.

That said, enormous strides were made for all of these technologies, such as batteries that provide electric vehicles with 500 miles of range,batteries that charge in 20 seconds , and the introduction of highly (relatively speaking) efficient hybrid electric cars that cost a few thousand dollars more than their gas counterparts. Obama’s support of the domestic car industry has also led to a rebound in the manufacturing sector.

But we still have a long way to go, and while $2 billion sounds like a lot of money, spread out over 10 years, it is but a drop in the bucket in Congress’s annual spending.

Source: Detroit News

Happy President's Day

Whether you had to work today or not, I would like to wish you a Happy President's Day! Let's consider the great men who worked tirelessly in the past to protect our freedoms and liberties as well as helped make this nation great.

Tomorrow is a big day for US auto companies as they present their strategic plans to Congress, outlining thier roadmap to success. Even the UAW, GM and Chrysler resumed talks yesterday, proving that all sides are motivated to make this a prosperous trip. I will be sure to post the very latest as events unfold tomorrow. Let's hope that GM and Chrysler have done all that is possible for them to receive their next round of loans. Especially Chrysler, who has plans for not one, not two, but four different electric powered models.

GM Considers Chapter 11 Bankruptcy as Viability Option

Are you ready to become upset? General Motors now claims that it may have to use the bankruptcy route in order to stay in business. On Tuesday, GM and Chrysler are both scheduled to report to Congress on their progress and plans to reverse their misfortunes and turn their companies around. The reason they need to justify themselves is in order to receive the next round of government loans.

Now, the part of all this that is disturbing is knowing that GM was given 9.4 billion dollars only to go bankrupt two months later. Of course, asking a company that is losing billions of dollars every month to right the ship in sixty days is also a stretch. Maybe Congress will consider this as they review their viability plans and cut them some slack.

As a devil's advocate, let me pose this question. "Is General Motors threatening Chapter 11 bankruptcy just to force Congress's hand into giving them more money?" GM states there are two options at this point, obtain another round of loans or file bankruptcy. What do you think Congress will do? Would they dare let the once proud American icon become bankrupt? As of this writing, GM's sales have not recovered and they are still bleeding cash, which means their loan in December has not accomplished much.

From Automotive News:

General Motors, nearing a Tuesday deadline to present a viability plan to the U.S. government, is considering as one option a Chapter 11 bankruptcy filing that would create a new company, the Wall Street Journal said in its Saturday edition.

"One plan includes a Chapter 11 filing that would assemble all of GM's viable assets, including some U.S. brands and international operations, into a new company," the newspaper said. "The undesirable assets would be liquidated or sold under protection of a bankruptcy court. Contracts with bondholders, unions, dealers and suppliers would also be reworked."

Citing "people familiar with the matter," the story said that GM could also ask for additional government funds to stave off a bankruptcy filing.

GM declined to comment, the story said.

GM and Chrysler LLC face a Tuesday deadline to file restructuring plans to the government in exchange for receiving $17.4 billion in federal loans.

Automakers have struggled as U.S. auto sales have tumbled amid a recessionary economy. U.S. auto sales in January tumbled to a 27-year low.

GM has been in talks with bondholders and the UAW to get an agreement on a restructuring that would wipe out about $28 billion in debt for the auto maker, sources have told Reuters. However, it appears unlikely a deal could be reached by the Tuesday deadline, they said.

GM has already announced plans to cut 10,000 salaried workers worldwide, or 14 percent of its staff, impose pay cuts for most remaining white-collar U.S. workers and has offered buyouts to its 62,000 U.S. workers represented by the UAW.

In addition, it is trying to sell its Hummer SUV and Swedish Saab brands and is reviewing the status of its Saturn brand.

Congress Agrees to Cut Auto Sale Tax Break

One step forward, two back. We had a pretty good incentive to buy a new car but negotiators on Capital Hill decided to strip off the tax refund for the interest paid on the loan. Bummer. I am old enough to remember the days when you could deduct the interest paid on credit cards. Boy, that was nice and let me tell you I had a nice refund every year!

The legislation will now be written such that a car buyer can only get a credit for taxes paid. This reduces the size of the overall bill somewhat and drastically reduces the amount our Government needed to pay for this perk. What I do not understand is why the lawmakers are concerned about $20 billion dollars or so when the entire package will be $785 billion? These numbers are so staggeringly huge that it really doesn't matter if the stimulus bill is $900 billion or $800 billion. The US has 0 billion so all this money will be created out of thin air and cause inflation.

I digress, so here is the story from Automotive News:

A proposed tax break for new-vehicle buyers is dramatically scaled back in the final version of the economic stimulus bill.

Auto dealers and their allies had sought to make interest on auto loans and the sales and excise taxes on new-vehicle purchases deductible from federal taxes. Proponents say those measures are needed to boost showroom traffic and sales.

But the final stimulus bill -- a compromise between House and Senate negotiators -- makes only sales and excise taxes deductible. The loan interest provision was dropped, a spokeswoman for Sen. Barbara Mikulski confirmed today.

Sources said the trim in the tax break for new-vehicle purchases reduced its cost from about $11 billion to about $2 billion. Congressional negotiators sought to limit the cost of the stimulus bill to pacify lawmakers worried about spending.

Mikulski, D-Md., sponsored the original provision on vehicle purchases at the request of dealers. The spokeswoman said Mikulski considers the deduction for sales and excise taxes an important victory.

Final vote as early as Friday

In a statement Mikulski estimated that a family buying a new car will cut its federal taxes $300 to $600.

The National Automobile Dealers Association first called for the broader tax break last November.

The association maintained today that even the scaled-back tax break promises to boost vehicle sales.

"Anything that can help get consumers back into dealership showrooms can also help stimulate an economic recovery," said David Regan, NADA's vice president of legislative affairs.

The stimulus bill now calls for $789 billion in tax cuts and new spending. The House and Senate could vote to approve the bill as soon as today or tomorrow.

President Barack Obama says the bill is needed to prevent a further collapse of the economy and to create or preserve as many as 4 million jobs.

Wade Newton, a spokesman for the Alliance of Automobile Manufacturers, said today that more must be done to get consumers interested in buying vehicles. He said he expects industry groups to look for other legislation to accomplish that goal.