The House of Representatives today voted 370 to 58 to approve a broad spending bill that includes $7.5 billion to start the loan program.
The Senate is expected to agree to the budget bill this week, and President Bush is expected to sign it. The bill's main purpose is to keep government running in the new fiscal year that begins Oct. 1.
The loan program represents unprecedented government involvement in auto industry operations -- far exceeding loan guarantees for Chrysler Corp. in 1979 and continuing federal support of vehicle technology research.
An energy law enacted last December authorized but did not fund the $25 billion loan program. The law also mandates sharply higher fuel economy standards in the 2011-20 model years.
Plunging new-vehicle sales and dramatically higher borrowing costs have compelled industry leaders, particularly from the Detroit 3, to make funding of the loan program a priority. Industry lobbyists got the funding attached to a bill that lawmakers had to take up before they go home for the November elections.
The final version of the bill is expected to include language that would speed the issuance of the loans and the adoption of rules by the Department of Energy that would govern their use, said John Bozzella, Chrysler LLC's vice president of global external affairs and public policy.
Industry lobbyists apparently failed to loosen other restrictions on the use of the loans, such as a requirement that the money can be spent only on retooling that leads to vehicles that are 25 percent more fuel-efficient than similar models.
Rep. John Dingell, D-Mich., chairman of the House Energy and Commerce Committee, said in a statement:
"Some critics will call this loan package a bailout. It is not. These loans amount to a little more than 1 percent of the real bailout -- the one that the Bush administration wants for Wall Street at a cost of $700 billion to taxpayers.
"The loans to the automakers will cost about $7 billion and will be repaid to the taxpayer at a profit," Dingell said. "The auto direct-loan package is a good deal for auto workers and a good deal for taxpayers."
Rep. Jerry Lewis of California, ranking Republican on the House Appropriations Committee, complained that the broad spending bill was put together by a handful of Democratic leaders. He said most lawmakers voted on the bill without knowing its contents.