White House: cut gas mileage demands

Even as Congressional Republicans slam American automakers for not making enough high-mileage vehicles, the White House has sent an alternative plan to Congress to rescue the domestic automakers which removes fuel efficiency demands from a retooling loan recently passed by Congress. The Energy Department, under White House leadership, has, through this time, refused to disburse the loans authorized by Congress to retool factories for highly efficient cars. Though the law demanded release of funds within 90 days, the Energy Department has said that they would not provide any loans until 2010.

Treasury Secretary Paulson has repeated that the $350 billion package passed by Congress to rescue the nation’s financial industry may not be tapped for the auto industry, even though he has acknowledged that his own actions have not had the desired effect of improving liquidity of funds.

Even without the gas mileage restrictions, the $25 billion loan package would have an uncertain disbursement date and appears to be earmarked for retooling rather than immediate survival.