A Gas Tax? Friedman Makes a Great Case for It

When the fix has to do with money, the rich never lose.

Thomas Friedman has written persuasively today about the need for a gasoline tax. I can't find the flaw in his logic, except to note that the poor and middle classes are hit the hardest in a recession, and even a modest gas tax can make a big difference to a home with a part-time breadwinner. Friedman's case is pretty tight, but look at it this way. A $20 tax consumes a larger percentage of a modest income than it does of a fat one. That's what makes a gas tax regressive in short-term effect. Is it still necessary? Yes. But I merely report. You decide:

"Today’s financial crisis is Obama’s 9/11. The public is ready to be mobilized. Obama is coming in with enormous popularity. This is his best window of opportunity to impose a gas tax. And he could make it painless: offset the gas tax by lowering payroll taxes, or phase it in over two years at 10 cents a month. But if Obama, like Bush, wills the ends and not the means — wills a green economy without the price signals needed to change consumer behavior and drive innovation — he will fail.

"The two most important rules about energy innovation are: 1) Price matters — when prices go up people change their habits. 2) You need a systemic approach. It makes no sense for Congress to pump $13.4 billion into bailing out Detroit — and demand that the auto companies use this cash to make more fuel-efficient cars — and then do nothing to shape consumer behavior with a gas tax so more Americans will want to buy those cars. As long as gas is cheap, people will go out and buy used S.U.V.’s and Hummers.[Emphasis added.]

"There has to be a system that permanently changes consumer demand, which would permanently change what Detroit makes, which would attract more investment in battery technology to make electric cars, which would hugely help the expansion of the wind and solar industries — where the biggest drawback is the lack of batteries to store electrons when the wind isn’t blowing or the sun isn’t shining. A higher gas tax would drive all these systemic benefits.

"The same is true in geopolitics. A gas tax reduces gasoline demand and keeps dollars in America, dries up funding for terrorists and reduces the clout of Iran and Russia at a time when Obama will be looking for greater leverage against petro-dictatorships. It reduces our current account deficit, which strengthens the dollar. It reduces U.S. carbon emissions driving climate change, which means more global respect for America. And it increases the incentives for U.S. innovation on clean cars and clean-tech."

Knowing what you now know, will you support Obama if he calls for a gas tax? I will. Because otherwise, the cost to future generations is incalculable.