Trump budget proposal targets loan program that could help Lordstown
DETROIT — The Trump administration’s budget proposal scraps a loan program that could help an upstart electric vehicle company’s plans to reuse the now-closed General Motors factory in Lordstown, Ohio.
In a summary of its budget blueprint for the coming fiscal year, the administration said Monday it wants to eliminate the Advanced Technology Vehicle Manufacturing Loan Program, which was created in 2008 to foster development of fuel-efficient vehicles.
Lordstown Motors Corp., a new venture that’s trying to reopen the former Lordstown GM factory east of Cleveland to build electric trucks, is considering asking for $200 million from the loan fund. It’s also getting a $40 million loan from GM.
But it’s not clear just yet whether the loan program’s demise would cut off money for Lordstown Motors. There are still just over seven months left in the current budget year, and the program still has more than $9 billion available to loan, according to the website for the Department of Energy, which runs the program.
Lordstown Motors said Monday that is has not yet applied for the loan and that it is just one of several financing options under review.
"We will factor this new information into our decision-making process, but our business model stands on its own without it," the company said in a statement.
Messages were left Monday seeking comment from the Energy Department.
Eliminating the program could be problematic for President Donald Trump, who campaigned on bringing back manufacturing jobs to Ohio, a key state in his re-election campaign. Trump lambasted GM for plans to close the Lordstown plant and then praised the new electric truck venture.
According to a summary of Trump’s budget plan, the administration wants to eliminate the loan program and others because the private sector should have a primary role in taking risks on new commercial projects.
“The government’s best use of taxpayer funding is in earlier stage R&D,” the document says.
U.S. Rep. Tim Ryan, a Democrat who represents the area and has been helping Lordstown Motors with the loan application, said he plans on talking with the Trump administration and is optimistic there is a way to make sure the money is available.
“I can't see why they wouldn't want to be a part of this,” Ryan said Monday. “It would be something we could work on together, and at the end of the day this will lead to jobs with good wages and benefits.”
These types of public-private partnerships, he said, are needed to help create a new manufacturing economy and rebuild the middle class.
The Advanced Technology Vehicles manufacturing program started under the Obama administration with $17.7 billion. It loaned $5.9 billion to Ford Motor Co. to upgrade its factories to build efficient vehicles, and another $1.6 to Nissan Motor Co. to retool a Tennessee factory to build electric vehicles. Tesla Inc. got $465 million to ramp up its Fremont, California, plant. That loan was fully repaid in 2013.
The budget priorities outlined in a presidential budget blueprint get forwarded to Congress, but the final outcome rarely resembles what a president proposes.
Amtrak
The White House budget released on Monday also proposed cutting funding for the U.S. government-owned passenger rail carrier Amtrak while calling for a significant increase in infrastructure spending.
The proposal would cut Amtrak funds in fiscal 2021 by more than 50% over 2020 levels. It could cut funds to the congested northeast corridor from $700 million to $325 million and cut long-distance train funds from $1.3 billion to $611 million, then phase out support for Amtrak's long-distance trains.
Democrats are not likely to go along with that proposal, which is similar to cuts that have been rebuffed in prior budgets proposed by the Trump administration.
Trump has also sparred with Democratic lawmakers over a $13 billion infrastructure project to build and repair tunnels and bridges in the New York City area known as "Gateway" that is critical to Amtrak ridership in the northeast.
In November, Amtrak said it had set records for ridership, revenue, and financial performance for the year ended Sept. 30, 2019, including 32.5 million customer trips, a year-over-year increase of 800,000 passengers.
Amtrak reported a loss of $29.8 million in the year compared with a loss of $170.6 million in the prior fiscal year.
Transportation infrastructure
The Trump budget calls for $810 billion in highway, transit, safety and other surface transportation funds and an additional $190 billion for other projects. It does not specify how to pay for the repairs or for funding the projected $261 billion shortfall in the highway trust fund over the next 10 years.
Joel Szabat, a deputy assistant secretary at the Department of Transportation, told reporters on a call the administration was "committed to working with Congress on a bipartisan basis to find a responsible way of funding" the shortfall.
EV tax credit
The budget also again proposes killing the $7,500 electric vehicle tax credit that phases out for each automaker after they sell 200,000 EVs. The White House blocked an effort in December by congressional Democrats to expand the credit.
Material from Reuters was also used in this report.
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