Well, I guess since taxpayers are already going to be on the hook for $700B. what’s another $7.5B to guarentee a $25B sub-market rate loans to 3 automakers that can’t build cars people want, with labor forces that get paid like $70/hr to screw in things (who sometimes can’t even get that right)……

http://www.reuters.com/article/marketsNews/idINN2732707220080927?rpc=44

WASHINGTON, Sept 27 (Reuters) – The U.S. Congress on Saturday agreed to finance a $25 billion loan package to help troubled automakers as part of a mammoth spending bill that will keep the government running until early March 2009.

The U.S. Senate approved the more than $630 billion spending bill 78-12. The bill was needed to finance defense, education, farm, health, foreign aid and other government programs after the current fiscal year expires on Sept. 30.

The U.S. House of Representatives passed the legislation earlier this week and it now heads to the White House for President George W. Bush’s signature.

Congress passed the bill as lawmakers continued negotiations on a $700 billion bailout for Wall Street that lawmakers say is needed to free up credit markets and avert a steep economic downturn.

The spending legislation allows a ban on offshore drilling to expire on Sept. 30. Democrats had hope to extend the ban, but did not have the votes in the face of stiff opposition from Republicans.

The bill sets aside $7.5 billion in taxpayer funds needed to guarantee $25 billion in low-interest loans to help struggling General Motors Corp.(GM.N: Quote, Profile, Research, Stock Buzz), Ford Motor Co.(F.N: Quote, Profile, Research, Stock Buzz) and Chrysler LLC produce more fuel-efficient cars and trucks.

Congress rushed to pass the massive spending bill before the new fiscal year begins Oct. 1 because lawmakers failed to approve any of the 12 spending bills Congress needs to act on every year to fund the government operating.

The bill includes $23 billion in emergency aid to states hit by hurricanes and other recent natural disasters.

It also provides full-year funding through Sept. 30, 2009, for three large, politically sensitive areas: defense, domestic security programs and expanded veterans’ benefits.

But the $488 billion provided for the Pentagon is less than the $492 billion sought by Bush. It includes less money for outside contractors and more to supervise them.

The bill does not include new money for the ongoing wars in Iraq and Afghanistan. Congress would have to confront that issue when existing funds for those wars run out in mid-2009.

Congress and the new president who takes office in January also will have to pass legislation to run the government from March 6, 2009, through Sept. 30. Those will pay for government programs like health care, law enforcement and foreign aid.

Democrats, who control Congress, have spent the past year battling the Bush administration over about $14 billion in proposed increases for education, science research and other domestic spending.

The bill increases money for programs to help low-income people pay their heating bills and boosts funding for domestic food aid. It also extends funding for student loans.

Other measures sought by Democrats to help workers cope with a slumping economy, such as extended unemployment benefits, were blocked in the Senate on Friday.

http://online.wsj.com/article/SB122245186315779385.html?mod=yahoo_hs&ru=yahoo

The U.S. government is about to offer billions to an industry that spent much of the past decade indulging itself in short-term strategies to boost profits and avoid reckoning with harsh reality.

No, this isn’t about Wall Street. This is about Detroit’s auto makers. Compared to the $700 billion in federal aid proposed to salvage the financial industry, the $25 billion in loans that Congress approved for the beleaguered auto makers don’t any longer look like such a big deal — even for people who opposed the idea on principle. Free-market conservatives have a bigger target now.

These loans — and other forms of federal assistance that may be offered through the tax codes and, potentially, the financial-system bailout — could form a vital bridge to get the Detroit auto makers across an economic abyss that now threatens to swallow them.

Ford World Headquarters in Dearborn, Mich., sends out a “Happy 100 GM” message to its crosstown rival on its 100th anniversary earlier in September.

But the companies that make it to the other side of the current slump won’t look much like the companies we’ve known for the past 100 years — from the vehicles they offer to consumers to their business structure and possibly ownership they will be radically changed.

The Detroit auto makers need a lifeline from the federal government for a variety of reasons. Some aren’t entirely their fault, such as the mess in the credit markets that’s choking off their access to capital to finance operations and consumer lending.

Still, the Detroit auto industry has only itself to blame for clinging to an approach to business that was in deep trouble 20 years ago, and has been obviously doomed since early in this decade.

If America’s taxpayers lend a helping hand to the Detroit Three, in the form of subsidized loans, the auto makers will face enormous pressure not to squander the opportunity by using the money to do business as usual.

The government loans are targeted to subsidize the production of cars with breakthrough technology to reduce oil consumption. That means that to get the money, the Detroit Three will have to stop showing off prototypes of high-technology vehicles and start building them. They seem to be prepared to do this.

General Motors Corp. recently showed off the production version of its forthcoming plug in gas-electric vehicle, the Chevrolet Volt. Chrysler LLC last week surprised the industry by declaring that it intended to put an electric vehicle into production by 2010 — the same year GM has vowed to start building the Volt. Ford Motor Co. has its fleet of hybrids including the hybrid Escape, and has embarked on a speeded up program to bring more of its fuel efficient European car designs to the U.S. market.

Unless the government relaxes the rules governing the loans, the car makers will have to use money borrowed under the programs for cars that are 25% more fuel efficient than the average of models in their class. In other words, replacing a car that averages 28 miles per gallon with one that averages 30 won’t cut it. The new model will have to average 35 miles per gallon.

The Detroit car makers can make cars that average 35 miles per gallon. But they can’t — yet — make very much money on such vehicles. There’s a reason why the Detroit Three stuck with selling gas-hungry trucks and sport-utility vehicles even as gasoline prices moved higher — and then exploded past the American public’s pain threshold. Trucks made more money. Once car makers burn off all the excess truck inventory they got stuck with when gas prices jumped, they might still make more money on trucks than many of their high-mileage cars.

Detroit’s auto makers need to make money building small cars. They need to deploy costly advanced technology such as lithium-ion batteries, more sophisticated fuel management and hybrid systems and educate consumers on why these technologies are worth money. They need to rethink how to achieve economies of scale, rethink marketing and rethink assumptions about why people buy cars.

Chrysler could be a trendsetter in this overhaul — because it has no choice. As the smallest and least globalized of the unionized U.S. auto makers, Chrysler doesn’t have much leeway to keep muddling along. It has to make money in the U.S., right away.

If Chrysler succeeds in launching by 2010 one of the prototype electric or plug-in vehicles it showed off last week, it will be because it relied on suppliers to do a lot of the heavy lifting that in the past it would have insisted on doing itself. (My vote: Do the plug-in minivan. A super fuel-efficient family hauler that could drive 40 miles on electric power, and 400 miles on eight gallons of gas, as Chrysler claims for its prototype, would be a mass-market smash, if priced right.)

Beyond that, Chrysler has already signaled it will seek partners to help share the costs of technology and vehicle engineering across a much wider base. Chrysler already has deals with Nissan Motor Corp. to collaborate on production of pickup trucks and small cars. Over time, such deals mean Chrysler will do less on its own, and need fewer employees.

GM and Ford won’t follow the same exact path. But if these 100-year-old companies want to celebrate 125th anniversaries they will need to put the status quo where it belongs: on the ash heap of history. Otherwise, the government could wind up wasting your tax money by helping them out.