This week, House Speaker Nancy Pelosi signaled that Congressional Democrats are willing to consider loans to automakers. The loans would be intended to help companies upgrade their factories so that their vehicles stand a better chance of meeting more stringent fuel economy standards.  In tandem with that goal, the hope is that factories will be able to accelerate development of hybrids and other low-carbon vehicles.

The proposed loans would go to such major manufacturers as Chrysler, Ford and GM, helping these companies to retool their factories as they make the shift from producing SUVs and other gas-guzzlers to fuel-efficient cars. These automakers are struggling to move to vehicles that meet new standards requiring a 40 percent improvement in fuel efficiency by 2020.

Congress has already authorized $25 billion in loans for American automakers in last year's energy bill. That program has not yet received funding. Another plan put together $6 billion in loans for automakers and their suppliers, but the automobile industry is looking for more cash — closer to $50 billion.

Pelosi told CNBC, "This is very, very important to an important industry in our country. It's about jobs, jobs, jobs." She was, however, unclear on what the final figure might be. The loans could be part of an energy bill, another economic stimulus plan or even a spending package meant to keep the federal government running through next year. Lobbyists for the automakers are hoping to get some sort of loan plan funded before Congress adjourns at the end of the month for the general election. It may not reconvene before the end of the year, so those lobbyists are facing a serious time crunch.

The loan package has faced extensive criticism from some sectors: in light of the government's efforts to rescue banks, loans to the troubled auto industry can be seen as a similar bailout. But auto industry representatives are working hard to insist that the loans are nothing more than a means of financing the huge infrastructure upgrade necessary to meet both the government's high fuel-efficiency standards and consumer demand for greener vehicles.

Considered in conjunction with the Center for American Progress' recent "Green Recovery" report, using loans to automakers to stimulate jobs and the economy may not necessarily be a bad idea. While the sheer level of funding that automakers are looking for seems a little high, there's no question that companies like Ford and Chrysler will need to find capital somewhere if they are going to switch to making greener cars.

Photo — Guth Family