Wednesday, May 7, 2008

A Holiday from Sanity

We should call recent proposals for a “gas tax holiday” what they are: a holiday from sound thinking, responsible governance, and any tenable solution to our widespread energy problems. Or, as Thomas Friedman has recently written, it is just plain “dumb.”

It may not have been a great surprise when John McCain recommended that the government suspend its tax on gasoline (18.4 cents per gallon) for the summer driving season. Hillary Clinton’s recent decision to join him is much more deplorable, given her history of working with, rather than against, policy experts (those experts largely suggest the gains to individuals will be quite minimal). Now several states are joining in the discussion as well.

In explaining their support for this measure, various politicians claim to care about the negative consequences high gas prices have for many Americans (a cynic would note they likely care more about their poll numbers than regular people, but that is another matter). Their claim of caring for people is powerful politically, but we need to look at it more closely if we want to actually address the roots of suffering.

There are a lot of things we should care about. We should care that the increasing cost of gasoline is negatively impacting the lives of millions of Americans who need their cars to drive to work, drop children off at school, and run errands. For these people, the increasing price of gas impacts their ability to work, seek medical care, and support their families. Moreover, these impacts are often felt most acutely by the poorest members of society, who often have the longest commutes and lowest levels of savings.

We should care about other issues as well. We should care that our dependence on oil has led us into a disastrous war in Iraq. We should care that the transportation sector is one of the major contributors to global warming. We should care that Americans drive more than anyone else. We should care that America is addicted to oil and that these types of problems will only get worse unless we address this dependence.

In other words, we cannot separate caring about people from caring about solving the issues that are causing the problems. Our caring must extend beyond the short term. This can only be done by connecting relief efforts with long-range policies designed to alleviate the structural conditions that created the problems in the first place. Bottom line: if we are offering short-term relief, it had better include long-term answers.

Along this line, here are some alternative proposals that make a lot more sense:

First, if we are committed to a gas tax holiday, it should be linked with one or more of the following conditions: a) an increased tax on the purchase of vehicles getting less than 25 miles per gallon; b) every dollar saved by the gas tax holiday is matched by a dollar-for-dollar investment in renewable energy technologies; and/or c) a significant increase in the fuel economy standards for all classes of vehicles.

A second set of policy considerations would look at why Americans drive so much. One of the reasons is that real estate developers and corporations have been establishing living and working spaces that are increasingly far apart. To counter this trend, we should provide incentives for developers and companies to create houses and offices that are centrally located to one another and to public transportation hubs. By contrast, we should discourage suburban sprawl through measures that penalize such developments. Call this the “McMansion tax.”

Third, we can begin work to revitalize public transportation systems so that Americans have alternatives to driving. Given that it is extraordinarily unlikely the price of gas is ever going to return to its low levels of a decade ago, the economics of public transportation are looking better and better. However, these systems require significant public investment to develop the infrastructure that makes their smooth operations possible. We should begin these investments now.

None of these policies will solve our energy problems alone. However, they will go a lot further than the chicanery of a gas tax holiday. We should use the present crisis as motivation to solve our problems, not just wave a populist flag at them.

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