Rarely do I find myself agreeing with a conservative. Today I found myself agreeing with someone who writes for the National Review. Charles Krauthammer has written an article, published in today's NY Post, that will be generating criticism, if not outright hatred, from his fellow Republicans. What is Krauthammer's sin?
Krauthammer has written in support of a higher gas tax. But not just a few cents higher. Krauthammer has written in support of an increase of 50 cents per gallon every 6 months for the next 2 years with a floor price of $4 per gallon (any price drop below $4 will automatically generate a tax to bring it back up over $4). A conservative proposing a tax increase? Why?
Krauthammer makes the very valid point that the only way to wean the US off of oil is to raise the price to make alternatives more attractive. Attempting to do it with other means such as minimum EPA requirements leads to companies cheating to make cars that do well on EPA tests but not necessarily on the road. Or companies end up making cars that no one wants to own leading to lobbying in Washington to make exceptions to include certain types of vehicles from fleet averages (SUVs for example).
High gas prices make those compact and hybrid vehicles suddenly very attractive while making those SUVs and Hummers very unattractive. GM didn't announce that they are closing factories that make SUVs and adding shifts to the factories that make compact cars because of a law from Congress. They did it because that is what the public is demanding.
Increasing the gas tax will reduce demand which will reduce the cost of a barrel of oil which means that the higher gas prices we pay will stay in the US instead of going to the countries that sell us oil. And most other developed countries are already paying much more for a gallon of gas than we are paying and yet they manage to survive.
Now what to do with that gas tax is where I disagree with Krauthammer. He would use it to reduce payroll taxes. I would like to see this money invested into mass transit which would help to further reduce demand for oil. Imagined improved bus and subway systems that were free to riders in all of our major cities. Imagine high speed trains connecting the country. Why is high-speed rail found throughout Europe and has made hardly a dent in the US? The answer is demand. There is little demand for high speed rail because air travel is cheap and Americans prefer to drive. But with airports reaching capacity or beyond, high-speed rail will become an attractive alternative especially when combined with a gas tax.
A higher gas tax will have a ripple effect throughout the economy so some of the tax dollars will be needed to help those who can least afford the pain but gas prices are going to go up anyway unless we can decrease demand. The Clinton solution of eliminating the gas tax, even temporarily, is exactly the wrong solution and Congress was wise enough to realize that immediately. Now they need to be wise enough to see the only way to get Americans to give up their gas guzzling ways is to make it too expensive to keep guzzling.
The article