Just As I Thought

Heresy, he said

Can it be? The often reactionary right-winger Charles Krauthammer advocating higher taxes to modify consumer behavior? Are you freakin’ kidding me? No, there it is, right there in black and white in today’s Washington Post:

Some things, like renal physiology, are difficult. Some things, like Arab-Israeli peace, are impossible. And some things are preternaturally simple. You want more fuel-efficient cars? Don’t regulate. Don’t mandate. Don’t scold. Don’t appeal to the better angels of our nature. Do one thing: Hike the cost of gas until you find the price point.

Unfortunately, instead of hiking the price ourselves by means of a gasoline tax that could be instantly refunded to the American people in the form of lower payroll taxes, we let the Saudis, Venezuelans, Russians and Iranians do the taxing for us — and pocket the money that the tax would have recycled back to the American worker.

This is insanity. For 25 years and with utter futility (starting with “The Oil-Bust Panic,” the New Republic, February 1983), I have been advocating the cure: a U.S. energy tax as a way to curtail consumption and keep the money at home. On this page in May 2004 (and again in November 2005), I called for “the government — through a tax — to establish a new floor for gasoline,” by fully taxing any drop in price below a certain benchmark. The point was to suppress demand and to keep the savings (from any subsequent world price drop) at home in the U.S. Treasury rather than going abroad. At the time, oil was $41 a barrel. It is now $123.

But instead of doing the obvious — tax the damn thing — we go through spasms of destructive alternatives, such as efficiency standards, ethanol mandates and now a crazy carbon cap-and-trade system the Senate is debating this week. These are infinitely complex mandates for inefficiency and invitations to corruption. But they have a singular virtue: They hide the cost to the American consumer.

Want to wean us off oil? Be open and honest. The British are paying $8 a gallon for petrol. Goldman Sachs is predicting we will be paying $6 by next year. Why have the extra $2 (above the current $4) go abroad? Have it go to the U.S. Treasury as a gasoline tax and be recycled back into lower payroll taxes.

Announce a schedule of gas tax hikes of 50 cents every six months for the next two years. And put a tax floor under $4 gasoline, so that as high gas prices transform the U.S. auto fleet, change driving habits and thus hugely reduce U.S. demand — and bring down world crude oil prices — the American consumer and the American economy reap all of the benefit.

Herewith concludes my annual exercise in futility. By the time I write next year’s edition, you’ll be paying for gas in bullion. [WaPo]

I had no idea that Krauthammer has been in favor of such a strategy; it only seems like common sense to me but one so often finds that common sense goes out the window in politics. It’s worth noting that his fellow right-wingers, in power for a dozen years or so, never considered a tax hike and certainly never voted to increase efficiency, either. At least a misguided and bureaucratic effort to increase mileage is something.

The British have been paying twice as much as we have for gas for ages, but it doesn’t seem to have curbed their car habit. Despite a pervasive and relatively cheap public transport system, walkable cities and towns, high fuel costs, and congestion charging, the UK is still awash in cars. Here in US, we have really poor public transport and cities designed around the car. I think that $4 is still not the point where we’ll see real, wholesale change. Yeah, people are suddenly waking up to the cost of SUVs, replacing them with smaller, leaner vehicles — but they’re still replacing them with cars and I see to movement from any government to expand public transportation. And I think it may be too late to spend the money necessary to create a transportation infrastructure that makes sense. All our eggs are in one basket: personal vehicles. And the problem with a personal vehicle is that it must carry around portable fuel of some type, whether it be oil-based, ethanol, hydrogen, or electricity. There’s a reason the San Francisco cable cars are still working today: they don’t have to carry around fuel. (Of course, one problem with the system can then shut the whole thing down. There are always tradeoffs.)

We were short-sighted generations ago when we gambled on oil and cars. Is it too late to make a huge shift in another direction? It’s certainly too expensive.

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