Trump asks agencies to look at GM subsidy cuts

President Donald Trump has asked federal agencies to look for ways to cut subsidies to General Motors Co. as a result of the automaker's plans to cancel production at several factories and lay off thousands of workers, according to a report. person close to his instructions.

Trump said in a tweet on Tuesday that his administration "plans to remove all @GM subsidies," including tax breaks for the purchase of electric cars. But a change in tax relief would require congressional action.

Trump has asked for a broader review of ways the federal government can block funds to GM, the person said on Wednesday. Fox Business announced Wednesday that the energy department was reviewing the funds provided to GM. Other agencies have received similar instructions, said the person.

GM, the largest US manufacturer, declined to comment. The company has received about $ 333.5 million in federal spending over the past 12 months, according to a US government website that tracks federal government spending. Over 93% of this comes from departmental vehicle purchases.

Read more: Trump's threat to eliminate GM subsidies spark skeptical reaction

GM also frequently receives large research and defense contracts. Among the most important are a Defense Department project that began in 2000 and reported $ 167.9 million to the company, as well as two grants of more than $ 100 million from the Department of Energy to electric vehicles and batteries awarded under the Obama administration. And US taxpayers lost more than $ 10 billion in the rescue of the company during the financial crisis of last year.

It will be difficult to put pressure on GM by removing federal funds, experts said. On the one hand, the Detroit-based company is on the cusp of generating revenue estimated at $ 144.2 billion this year, so federal spending would not do much harm to its bottom line.

And federal contracts and grants often contain provisions allowing the government to cancel them, but only if GM has failed to meet the conditions or for some other reason, said Lynn Ross, a professor at the McCourt School of Public Policy. Georgetown University.

"I'm sure there are ways out of these contracts, but not just because the president is unhappy with what GM has done," Ross said. "I mean, the whole system is set up to prevent things like political attacks."

The General Services Administration, which buys vehicles for US agencies, said in an e-mail statement that the White House had not given it any instructions regarding General Motors' purchases and that it was considering meeting all contractual obligations vis-à-vis society.

Tax credits

On Tuesday, Trump mentioned electric vehicle tax credits as a way to punish GM. Currently, consumers who buy electric cars can get a federal tax break of $ 7,500. The credit begins to disappear gradually for a manufacturer after the first 200,000 eligible vehicles. Tesla Inc. has reached this threshold and GM is expected to reach this year.

Trump is also bound by the tax credit, according to Joseph Cordes, professor of economics and public policy at George Washington University. The credit probably can not be changed by decree because it is embedded in the tax code and specifies its purpose and eligible beneficiaries, he said. To change that would require an act of Congress.

"I do not really think he can do anything, to be honest with you," Cordes said.

While the House Committee on Means Tax Exchanges could theoretically change the wording of the tax credit to exclude GM vehicles, Cordes said legislators would probably not do so.

"We do not use our tax code to punish companies that do something that the president does not like, so I think that makes a lot of noise," he said. DM

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