Mikulski Proposes Plan to Help Automakers, Consumers


TOWSON (Nov. 12, 2008)—As the U.S. Senate contemplates a bailout for the nation's ailing auto manufacturers, Maryland's senior senator is proposing a plan to assist car dealers and consumers.

Sen. Barbara Mikulski, D-Md., will introduce legislation during next week's lame-duck session to allow sales tax and loan interest deductions on new vehicle purchases.

The deductions could save buyers thousands of dollars and potentially spike lagging sales, Mikulski said.

"As the American automobile industry goes, so goes so much of our economy," she said. "The best way to help manufacturing is to stimulate demand."

The proposal comes as the nation's three biggest automakers—Chrysler LLC, Ford Motor Co. and General Motors Corp.—are asking for more than $50 billion in government assistance.

While the manufacturers are struggling to survive, auto dealerships are also in crisis. Dealership sales made up nearly 20 percent of Maryland's total retail sales in 2007, compared to a national average of 18 percent.

As many as 700 of the nation's 20,700 new-car dealerships will close in 2008, according to estimates by the National Automobile Dealers Association, eliminating an estimated 37,100 jobs. Data on Maryland-specific closures was not available.

"This is the slowest that I've seen the business going," said Mel Bayo, director of sales training and 23-year employee for Mile One Automotive. "I've got a daughter in college and I've also got a mortgage to pay as well. We're worried about the current situation."

Mikulski's plan would be part of a proposed bailout package that would use a portion of October's $700 billion economic bailout to assist automakers.

If signed into law, her plan would allow families earning less than $250,000 a year and individuals earning less than $125,000 to deduct sales taxes and interest on new cars. The interest deduction would only be available on loans of less than $49,500.

The deductions would typically save about $1,553 on a $25,000 car and would be available on any purchase between Nov. 12, 2008, and Dec. 31, 2009, Mikulski said. The estimated cost of the program is about $1 billion to taxpayers.

"The cost of doing nothing is horrendous," Mikulski said. "We cannot let our American automobile industry implode."

The Senate is scheduled to begin its lame-duck session Monday. Lame-duck sessions take place between November elections and January inaugurations, allowing outgoing members—or lame ducks—to participate.

Mikulski expects support from Senate Democrats, including Sens. Carl Levin, D-Mich., Debbie Stabenow, D-Mich., and Majority Leader Harry Reid, D-Nev. She is also working to gain Republican support.

"Congress has a sense of urgency to do something to help the automobile industry," Mikulski said. "I believe my plan will be received very well."

Capital News Service contributed to this report.

Mikulski Press Release issued Nov. 12, 2008:


Washington, D.C. – Senator Barbara A. Mikulski (D-Md.) today unveiled details of legislation she will introduce when the Senate reconvenes next week that will help save American jobs, help American consumers and support America’s automobile industry. Her announcement comes just days after the Department of Labor reported that the nation’s unemployment rate has hit a 14-year high as the economy continues to worsen.

“We need to get our economy back on its wheels,” said Senator Mikulski. “My bill is targeted at saving American jobs and helping families buy the cars they need to get to work and take their kids to school. Our economy is teetering. Congress must take immediate steps to save jobs and help struggling families. My bill will do just that.”

The legislation, which Senator Mikulski will introduce Monday, and which she will seek to include in the Senate stimulus package, will help Americans afford a car during these tough economic times, and spur investment in America’s auto industry, one of the biggest drivers of the American economy. Under current law, the interest on a car loan is not tax deductible. Senator Mikulski’s plan will change this, making interest payments on car loans and state sales/excise car tax-deductible for new cars purchased between November 12, 2008 and December 31, 2009. This deduction is “above-the-line” meaning it can be taken by both itemizing and non-itemizing tax payers. The plan is targeted so that only families making less than $250,000 a year, or individuals making less than $125,000 annually, qualify for the full deduction. Under this plan, a family would save about $1,553 on a $25,000 car, and about $2,500 on a $35,000 car. For more information on Senator Mikulski’s proposed legislation, go to: http://mikulski.senate.gov/pdfs/Press/AutoAmend.pdf .

Millions of American workers and retirees and thousands of companies depend on the automobile industry for jobs, retirement benefits and revenue. This year alone the U.S. auto industry has cut 110,000 jobs. In Maryland, approximately 500 jobs have been lost this year due to the closing of automobile dealerships. It is projected that nationwide this year 700 automobile dealerships will close. Those 700 dealerships employ approximately 37,000 American workers. The collapse of General Motors, Ford and Chrysler would mean more than 3 million Americans would be out of work, according to the Center for Automotive Research.

“Targeted, temporary and timely assistance to the auto industry makes sense for the U.S. taxpayer,” said Senator Mikulski. “The alternative is millions of Americans out of work, widespread business failures, and the shifting of billions of dollars of auto company pension obligations onto the federal government. Prompt action by the Congress and the Administration on my legislation will save jobs, provide real help for American families and small businesses, and get our economy rolling again.”

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