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Dear President Bush:
For the next week or so you have something that people don’t get very often in life: a second chance. Being in the oil business, I’m sure you know that America has been gulping down subsidized energy for decades. After September 11 you had a chance to adjust gas taxes so the price we pay at the pump would reflect the social cost of using gas. People would have bought into this. Even some of your neocon buddies were pitching the idea for security and foreign policy reasons. You asked for sacrifice, but did nothing.
Gas prices have spiked in the aftermath of Hurricane Katrina, but are starting to come down. This gives you another chance. Next time you step up to the microphone announce that the federal gas tax is going up by 10 cents per gallon on October 1, and 10 more cents a gallon on January 1, 2006, 7, 8, and 9. Since gas prices are falling by about 10 cents per week, all this does is delay the drop by one week. By phasing in the increase, you give people time to adapt their car purchases, commuting habits, and other long-run factors. And to further minimize the effect, announce that you propose a corresponding revenue-neutral income tax reduction for people in the lowest tax brackets. (You know – the people who are taking it in the shorts from expanding trade.)
Dominique de Villepin, France’s new Prime Minister, once said “There is nothing wrong with the United States that can’t be cured by a dollar per gallon increase in the gas tax.” Now I know the French are invertebrates (little brains, no backbone) but the man’s half right. Resources For The Future calculated that a 50 cent per gallon increase in the gas tax would offset all the negative externalities of gasoline consumption. William Nordhaus, Sterling Professor of Economics at Yale (you remember them, right?) estimated that just 25 cents per gallon would be sufficient to offset the effects of global warming. Just think of the fun you can have beating up on the Euros with this. While they are coming up with all kinds of excuses about why they can’t meet their solemnly agreed to Kyoto targets, you’re out there actually doing something about the problem. Hell, they might even be so impressed that they will help you out with the mess in Iraq. (Woah. Slow down. Deep breaths. We are talking about invertebrates here.) Adjusting the gas tax would also recoup the money we need to maintain our infrastructure, since the gas taxes that pay for that infrastructure have not been raised in about 15 years.
And while you are at it, why not throw a couple of other items for good measure? Like getting rid of the provision in the tax code that makes Hummers deductible as a business expense. Once people are paying full price, instead of automatically getting one third off, the market for these testosterone toys will dry up in no time flat. And how about eliminating the mortgage interest deduction for second homes? I am happy to see that the Department of Justice is suing realtor associations for the anti-competitive practices used to support the 6% commissions (about damn time!). But eliminating the deduction for second homes would greatly reduce the incentive to build vacation homes in places like Grand Isle, LA and Outer Banks, NC, which can get flattened by hurricanes.
I’m going to get off my soap box now, have another glass of wine with my Chinese take-out dinner, and everything will be fine, at least until morning. But please take this opportunity, Mr. President. There are only 1,224 days left in your administration (but hey, who’s counting). Millions of Americans like me have worked too hard making a life for ourselves and our families to have you screw it up any more than you have already.
Sincerely,
Adam Smith
For the next week or so you have something that people don’t get very often in life: a second chance. Being in the oil business, I’m sure you know that America has been gulping down subsidized energy for decades. After September 11 you had a chance to adjust gas taxes so the price we pay at the pump would reflect the social cost of using gas. People would have bought into this. Even some of your neocon buddies were pitching the idea for security and foreign policy reasons. You asked for sacrifice, but did nothing.
Gas prices have spiked in the aftermath of Hurricane Katrina, but are starting to come down. This gives you another chance. Next time you step up to the microphone announce that the federal gas tax is going up by 10 cents per gallon on October 1, and 10 more cents a gallon on January 1, 2006, 7, 8, and 9. Since gas prices are falling by about 10 cents per week, all this does is delay the drop by one week. By phasing in the increase, you give people time to adapt their car purchases, commuting habits, and other long-run factors. And to further minimize the effect, announce that you propose a corresponding revenue-neutral income tax reduction for people in the lowest tax brackets. (You know – the people who are taking it in the shorts from expanding trade.)
Dominique de Villepin, France’s new Prime Minister, once said “There is nothing wrong with the United States that can’t be cured by a dollar per gallon increase in the gas tax.” Now I know the French are invertebrates (little brains, no backbone) but the man’s half right. Resources For The Future calculated that a 50 cent per gallon increase in the gas tax would offset all the negative externalities of gasoline consumption. William Nordhaus, Sterling Professor of Economics at Yale (you remember them, right?) estimated that just 25 cents per gallon would be sufficient to offset the effects of global warming. Just think of the fun you can have beating up on the Euros with this. While they are coming up with all kinds of excuses about why they can’t meet their solemnly agreed to Kyoto targets, you’re out there actually doing something about the problem. Hell, they might even be so impressed that they will help you out with the mess in Iraq. (Woah. Slow down. Deep breaths. We are talking about invertebrates here.) Adjusting the gas tax would also recoup the money we need to maintain our infrastructure, since the gas taxes that pay for that infrastructure have not been raised in about 15 years.
And while you are at it, why not throw a couple of other items for good measure? Like getting rid of the provision in the tax code that makes Hummers deductible as a business expense. Once people are paying full price, instead of automatically getting one third off, the market for these testosterone toys will dry up in no time flat. And how about eliminating the mortgage interest deduction for second homes? I am happy to see that the Department of Justice is suing realtor associations for the anti-competitive practices used to support the 6% commissions (about damn time!). But eliminating the deduction for second homes would greatly reduce the incentive to build vacation homes in places like Grand Isle, LA and Outer Banks, NC, which can get flattened by hurricanes.
I’m going to get off my soap box now, have another glass of wine with my Chinese take-out dinner, and everything will be fine, at least until morning. But please take this opportunity, Mr. President. There are only 1,224 days left in your administration (but hey, who’s counting). Millions of Americans like me have worked too hard making a life for ourselves and our families to have you screw it up any more than you have already.
Sincerely,
Adam Smith
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