The Hill News

As House Republicans announced their plans to offset additional disaster-relief funding with cuts across the federal budget, Democrats are responding angrily to a proposal that would cut $1.5 billion from a program aimed at helping the American auto industry.

Republicans announced that they would nearly halve the budget for so-called "Section 136 loans," from $3.4 billion to $1.9 billion. The loans lend to American automakers at reduced interest rates for projects like retrofitting factories and improving technology in their car lines; Chrysler, hit hardest by the economic recession, has alone applied for over $3 billion of the loans.

Michigan Democrats quickly denounced the proposal, arguing that the program had created or saved 40,000 jobs and helped put General Motors and Chrysler back in sound financial health.

Rep. John Dingell (D-Mich.) told the Detroit Free Press that the loan program was "vital to preserving American manufac! turing" and that "cutting this funding is like burning our seed corn."

Rep. Gary Peters (D-Mich.) accused House Majority Leader Eric Cantor (R-Va.) of taking from his district to give to his own.

"By introducing a plan to gut Section 136 loans, House Republicans have shown that they don't care about manufacturing jobs in places like the greater Detroit area,” Peters said. “We should fund recovery efforts in Eric Cantor's district, but not at the expense of programs designed to address the economic disaster that hit Michigan and other manufacturing states. Eric Cantor is wrong, and I will fight against his job-killing agenda.”

Peters tweeted later in the day: "Cantor don’t pay 4 natural disaster recovery in your district by killing auto jobs."

Cantor's Virginia district was hit hard by Hurricane Irene, and the epicenter of the earthquake that shook the Eastern Seaboard late last month. But Cantor argued that the loans haven! 't been used for years, and the cuts would not entirely elimin! ate the program.

"I think it's worthy of note … that this money has been laying around since Sept. 30, 2008," Cantor said. "That is three years."

Cantor also said that claims of specific job growth through the program "can't be substantiated."

The House will take up the Republican proposal next week.