VOL. 123 | NO. 189 | Friday, September 26, 2008
Alexander: Financial Crisis Could Affect VW Plant
By ERIK SCHELZIG | Associated Press Writer
NASHVILLE, Tenn. (AP) - Sen. Lamar Alexander said Thursday that Volkswagen's new plant in Tennessee could be affected if the country's financial crisis isn't resolved.
Alexander, R-Tenn., said he was told by executives at the recent opening of Volkswagen AG's new American headquarters in Virginia last week that the German automaker's credit branch is having trouble securing the $300 million it borrows each month to make car loans.
If that credit crunch gets worse, it could affect VW's plans to build cars at a new plant in Chattanooga, Alexander said in a telephone interview with The Associated Press from Washington.
"If a company the size and prestige of Volkswagen can't get the money to make car loans, then I can't buy a car," Alexander said. "And if I can't buy a Volkswagen, they're not going to be making any in Chattanooga, and people aren't going to have jobs."
Volkswagen spokeswoman Jill Bratina denied the financial crisis will have any impact on the company's plans to build a $1 billion assembly plant and create 2,000 jobs in Chattanooga.
"Our Volkswagen Credit business is extremely strong," she said. "We have access to the necessary funds and will continue to offer a full range of services to our customers and dealers."
Alexander said he expects Congress to reach an agreement by the end of the weekend over a $700 billion bailout plan to rescue financial institutions from crippling debt.
"People are beginning to understand that what we're talking about is whether a Tennessean can get a student loan or a mortgage loan, or car loan, or whether our home values are solvent," he said. "This is a circumstance none of us has ever seen before."
Details still being worked out include ways to avoid what Alexander called "excessive risk" for taxpayers.
"We ought to make sure we have aggressive oversight, that any revenues that go to government go to reduce our federal debt and not into the federal piggy bank, and that executives of firms that got into trouble don't get rich as a result of us buying these mortgages," he said.
Alexander praised the two presidential nominees, Democratic Sen. Barack Obama and Republican Sen. John McCain, for agreeing to meet with President Bush and work toward a solution.
But Alexander said he hadn't expected McCain's announcement that he wanted to postpone Friday's presidential debate in Mississippi to focus on the economy.
"I'm a little surprised by it, frankly," Alexander said. "I hope it goes ahead."
Belmont University in Nashville is scheduled to host the second presidential debate Oct. 7.
Alexander said another issue of importance to Tennesseans working its way through Congress is a proposal for a two-year extension of the sales tax exemption for states like Tennessee, Florida and Texas that don't have an income tax.
Alexander said about 600,000 Tennesseans are eligible for the deduction, and that it saves an average of $400 a year on federal taxes.
"It's only fair that Tennesseans are able to deduct their state and local taxes, just as citizens in more than 40 states are able to do it," he said. "We've decided we don't want a state income tax, and we shouldn't be penalized for that."
The sales tax deduction was part of a package passed by the Senate that included energy incentives and Alternative Minimum Tax proposals. But the House is evaluating each of those proposals in separate bills, which could lead to a showdown between the two chambers.
"That means none of it may become law," Alexander said. "So I hope the House changes its mind."
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