Auto Rescue Possible in Lame Duck Session, Stimulus Package Unlikely
Barack Obama will be sworn into office on Jan 20th, the 111th Congress will take their seats on Jan 6th, but that doesn't mean policymaking in Washington in on hiatus until the new year. Congress has entered a lame duck session this week and they have big issues on the agenda, two of which chambers of commerce will watch carefully: an auto industry rescue plan and an economic stimulus plan.
The biggest piece of legislation on the table this week is a rescue plan for US automakers. Hit by high gas prices and tight consumer credit, US automakers have seen sales fall over 50% in October alone, and total cars sales in 2008 is projected to be the lowest in decades. American automakers warn they may be out of money within months without help. The US auto industry and its suppliers employ roughly 1 million Americans and is the nation's leading customer for steel, glass, aluminum and computer chips. A Nov 4th report by the Center for Automotive Research (CAR) found that a failure by the Big 3 would cost almost 3 million jobs with impact felt far beyond Detroit.
The debate over an automotive rescue plan revolves around $25 billion in federal loans that Congress appropriated in 2007 to help the Big 3 modernize production and meet new fuel economy standards. Some lawmakers are reluctant to authorize further loans to aid Detroit automakers and prefer to see the existing $25 billion allocated quickly. Other argue that those loans were focused on long term modernization, not short term rescue and call for a rescue package like the one passed to benefit the financial industry. For an interesting discussion, see this editorial published in last Thursday's USA Today Michigan Governor Jennifer Granholm and Detroit Chamber President Dick Blouse.
Less likely to pass before 2009 is a broad economic stimulus plan. The proposal which will likely echo the House proposal from September, could include an extension of unemployment benefits, additional food stamp funding, and aid to states for Medicaid. Of particular interest to chambers, however, is the possibility of as much as $60 billion in infrastructure spending. As many as 3,000 transportation and infrastructure projects nationwide have gone through all necessary planning are are merely waiting for funding. The stimulus package could get the ball rolling on many of these projects, putting back to work millions of construction workers unemployed since the housing bust. This could be good news for the highway expansion your community has been waiting for.
The Washington Post reported this weekend that Democratic lawmakers are scaling back their stimulus proposal. Undoubtedly we will all closely watch the lame duck session.