Michigan Democrats Propose Manufacturing Initiative

A. Research and Development Tax Credit

1. Permanent Extension of R&D Tax Credit -- Strengthens the credit by increasing the Alternative Simplified Credit rate and making the entire credit permanent.

B. Vehicle Mandates and Goals

1. Flexible Fuel Vehicle Mandate -- Require auto manufacturers to produce 25 percent of new vehicles sold capable of running on E85 or other biofuels by 2010, increasing to 50 percent by 2012 .

2. Technology Goal -- Establish a goal that by 2020, manufacturers will sell only new vehicles that 1) utilize advanced technology (such as hybrid, clean diesel, or fuel cells) or alternative fuel; or 2) utilize an internal combustion engine that achieves at least 35 miles per gallon. Provide incentives to encourage manufacturers to meet this goal in advance of 2020. If a manufacturer commits to meet this goal before 2020, and meets measurable milestones, that company would no longer have to meet annual CAFE requirements under section V.C.1. but would be required to certify annually continued progress toward meeting the 2020 technology goal.

C. Tax Credits - Advanced Technology and Flexible Fuel Vehicles

1. Tax Incentives for Manufacturing -- Provide manufacturers an investment tax credit to re-tool or expand existing domestic facilities to produce advanced technology vehicles or certain parts or components for those vehicles. Provide manufacturers tax credit to offset cost of building FFV-capability into new vehicles.

2. Consumer Tax Credits -- Increase the amount and extend the period of availability of the consumer tax credit in current law for purchase of advanced technology vehicles, including hybrids, plug-in hybrids, clean diesels, and fuel cell vehicles.

D. Programs to Support U.S. Manufacturing

1. Technology Competitiveness Program -- Rename, strengthen and enhance the Advanced Technology Program (ATP) at the National Institute of Standards and Technology making selected investments in research and technology areas critical to support U.S. global economic competitiveness through the stimulation of cooperation between universities, small entrepreneurial businesses, state economic development organizations, and the National Institute of Standards and Technology. Improve the role of the federal government in helping American small and medium sized manufacturers to be more competitive in a global economy.

2. Manufacturing Extension Partnership Program (MEP) -- Increase funding for the MEP Program, which co-funds a nationwide system of manufacturing support centers to assist small and mid-sized manufacturers modernize to compete in a demanding marketplace by providing technical assistance and helping small firms boost productivity, streamline operations, integrate new technologies and lower costs.

II. TRADE

A. Fair Trade Enforcement

1. Currency Manipulation -- Direct the President to pursue cases in the WTO against China and Japan under WTO rules that prohibit members from gaining a trade advantage from currency manipulation. Amend U.S. countervailing duty law to expand the authority of the administering authority or the International Trade Commission (ITC) to impose countervailing duties on products from nonmarket economy countries and make exchange rate misalignment by any foreign nation as a countervailable export subsidy. Require that USTR's annual National Trade Estimate report include as defined trade barriers: currency misalignment, non-ILO labor practices and weak or non-existent environmental standards.

2. Trade Enforcement, Market Access and Protection of Intellectual Property -- Direct the President to appoint a Special Trade Prosecutor at USTR and to aggressively enforce trade laws. Enhance resources to deter, detect, seize and prosecute counterfeit imports and pursue trade action for failure to meet commitments to reduce IPR infringement levels.

3. Open Korea's Closed Automotive Market -- Insist on a two-way street in trade with Korea in autos and auto parts. The currently negotiated U.S.-Korea free trade agreement fails to effectively tear down Korea's non- tariff barriers, prevent Korea from using future non-tariff barriers to maintain its closed market, and ensure access to imports to Korea's automotive market.

4. Make China Play By International Rules -- China is a member of the WTO and is obligated to play by the same rules as everyone else. Direct USTR to file additional cases at the WTO as appropriate to challenge China's non-compliance.

5. Address Non-Tariff Barriers in WTO Negotiations -- Direct the Administration to place non-tariff barriers on par with tariff barriers in negotiations at the WTO. Trade negotiators must ensure through explicit linkages that U.S. tariff barriers will not be reduced unless other countries tackle the non-tariff barriers they use to keep out U.S. products.

III. HEALTH CARE

A. Health Care Tax Incentives

1. Catastrophic Health Care Expenses -- Amend the tax code to provide federal catastrophic health care insurance to pick up 50 percent of health care costs above a certain threshold ($50,000 in 2006, for instance) for all workers with company-provided coverage for manufacturers operating in the U.S.

2. Health Care Expenses -- Provide as an alternative to the current tax deduction for manufacturers a tax credit for a portion of health care premiums paid for their oldest active or retired employees (aged 55-64).

3. Early Retiree Health Care Tax Credit -- Allow certain early retirees to receive an immediate 65 percent refundable health care tax credit, providing manufacturers some relief from these costs and therefore reducing manufacturing costs.

IV. ADVANCED VEHICLE DEVELOPMENT

A. Initiatives for Longer-Term Advanced Technologies

1. Advanced Technology Vehicle R&D -- Increase joint industry- government R&D on advanced batteries, clean diesel, diesel hybrid, plug-in hybrid, and flex fuel hybrid technologies; increase R&D on hydrogen storage and fuel cell membranes and catalysts; expand demonstrations of fuel cell fleet vehicles.

2. Hydrogen Infrastructure -- Increase tax credit available for hydrogen refueling equipment (to up to 50 percent of cost, up to $50,000). Provide federal funding for demonstration of a hydrogen refueling highway and demonstration of hydrogen refueling infrastructure and equipment.

3. Defense Hydrogen Technology & Logistics Initiative -- Increase funding for and reorganize existing programs at the Department of Defense to implement specific targets for the number of hydrogen support vehicles to be used on military installations, to establish a detailed schedule for the installation of hydrogen infrastructure (including storage and distribution) on military installations, and to establish a schedule for the development, demonstration, and procurement of appropriate hydrogen vehicles for use on military installations.

V. FUEL CONSERVATION AND BIOFUELS

A. Environmental Technology Innovation

1. Biofuels R&D -- Increase R&D on technologies to produce ethanol from cellulosic materials, such as waste paper, grass, corn stalks, wood chips, and fast-growing trees. Increase funding for other biofuels, such as biodiesel, to replace conventional diesel fuel.

2. Tax Incentives for Biofuels Producers -- Increase and expand tax incentives for producers of biofuels and ethanol, including incentives to encourage early production of cellulosic ethanol to meet Renewable Fuel Standard below.

3. Biofuels Capacity -- Ensure the availability of loan guarantees and grant programs for expanding ethanol infrastructure, especially cellulosic ethanol, through mechanisms established by the Energy Policy Act of 2005.

B. Biofuel Mandate and Development of Infrastructure

1. Renewable Fuel Standard -- Increase the amount of ethanol in the RFS and provide incentives for increased cellulosic ethanol. Establish tax credit to encourage cellulosic ethanol production.

2. E10 Fuel Mandate -- Require all gasoline motor fuel sold in the U.S. to contain not less than 10 percent ethanol fuel by 2012.

3. Ethanol Pump Mandate -- Set a goal of installing alternative fuel pumps at 10 percent of retail filling outlets by 2015. Require each major oil company to install new pumps at not less than 50 percent of the stations they own and operate by 2012 and at not less than 100 percent of those stations by 2015. Require FTC to promulgate rules to prevent interference by the oil companies with installation of new pumps.

4. Tax Credit for E85 Infrastructure -- Increase tax credit for installation of new pumps (to up to 50 percent of cost, up to $50,000) and provide one-year depreciation for new pumps. Establish tax credit for fuel blenders to encourage E85 availability.

C. Fuel Savings

1. CAFE Requirements -- Direct the National Highway Traffic Safety Administration to issue new regulations to increase fuel economy standards for passenger cars thru 2020, based upon an attribute-based system (such as size or weight), consistent with the "maximum feasible" requirement in existing law and including other provisions necessary to promote small car production in the U.S. Direct NHTSA to issue new light truck standards thru 2020. Requirements to meet new CAFE standards may be waived if technology goals are agreed to under section I.B.2.

2. Extension of Dual-Fuel Credit -- Extend CAFE credit for dual- fuel vehicles through 2020.

VI. DEPARTMENT OF DEFENSE INITIATIVES

A. Department of Defense Manufacturing Initiatives

1. DOD Strategic Plan -- Require the Department of Defense to prepare a strategic plan and investment strategy for manufacturing technology R&D, as per the recommendation of the Defense Science Board. The purpose of this plan is to focus attention on the issue, increase coordination among DOD components, and provide more transparency to Congress on DOD's efforts to address manufacturing issues as they relate to the defense industrial base and weapon systems production.

2. Manufacturing R&D -- Authorize funding in fiscal year 2008 for manufacturing R&D, including $10 million annually for development of defense technology-specific strategies and development plans, manufacturing test beds, and incentives for manufacturing innovations (authorized by FY-06 Defense Authorization bill), $30 million annually for an Industrial Base Innovation Fund, which would help support DOD's ability to address specific shortfalls in the defense industrial base to meet short term surge manufacturing requirements, and $10 million annually to support longer term (often university and small-business based) research into new manufacturing techniques.