1. We have a tremendous dependence on foreign oil.
2. Our foreign-trade deficit remains huge.
3. Reducing the budget deficit is a major national priority, agreed to by both Democrats and Republicans.
4. The tax on gasoline is dramatically lower in the U.S. than almost anywhere else.
5. We’ve largely lost interest in fuel efficiency when buying a car.
Well, then, here’s an idea: let’s lower the gas tax! Specifically, let’s repeal the paltry 4.3-cent hike in the tax that was enacted in 1993.
In fact, of course, that 4.3-cent tax hike should have been higher — a dime the first year, say, rising an additional dime each year for a total of five. That would have solved much of the deficit problem (figure about $1 billion per penny) and encouraged people to “beat” the tax by moving on to more fuel-efficient cars when they next bought one — a win-win situation for everyone but Exxon and the Saudis.
It’s fundamental: you tax the things you want people to cut back on or conserve; you lower the tax on the things you want to encourage (like work and saving and investing). So hike the gas tax, lower the deficit and the income tax and maybe the capital gains tax.
That the Republicans would move to cut the gas tax in an election year is predictable but embarrassingly bad public policy. That the Democrats feel they have to play along is almost as bad.
Remember: this money isn’t “free.” Dick Armey suggests we can recoup it by cutting the money out of education for our kids.
Wouldn’t it be better to penalize the Saudis and other oil producers rather than our own children? To do that, you simply keep (or better still raise) the gas tax, and watch as, on the margin, people drive 2% more efficiently, if they want to, to compensate. Instead of a car that gets 20 miles to the gallon, they’d eventually drive one that gets 20.5 miles to the gallon instead. The Saudis would see their oil revenues decline, which is too bad for them, but the American family would get to drive the same distance at the same speed at the same fuel-cost per gallon.
True, people don’t trade cars every year. But this has been an ongoing process. Very few people drive cars that get 10 or 12 miles to the gallon as a generation ago was common. Adjusted for inflation, we pay less for gas to drive a mile than at almost any time in our history.
Is this really a time to cut money from education? Is the way to compete in the global economy to de-emphasize education and burn more gas? Dole and Armey apparently think so. And politics being politics, the Democrats may have to cave in and go right along.