Ford Motor Company was supposed to be the only major U.S. automaker not in need of a bailout, but this week Ford
accepted a $5.9 billion loan subsidy under the Energy Independence and Security Act of 2007 (EISA). The EISA loan is
designed to help the auto industry by supporting “capital investments in facilities designed to produce vehicles with greater fuel efficiency and reduced emissions.” It’s not a “bailout,”
Ford executives would likely argue, on the basis that the money is a loan. But would Ford have been able to obtain the same amount of money and the same interest rate in the free market? To what extent is the loan (the difference between the government-provided loan and what the free market would offer) a subsidy? Undoubtedly, a $5.4 billion infusion of cash from already tapped-out taxpayers for doing what Ford was presumably already doing with their business model won't hurt their cash flow. And coming in a tough year for the auto industry, it was probably even more welcomed.