And they won't work as well. I think it's nice that our new government wants to make the auto companies produce higher mileage vehicles. It seems that they also want US automakers to not die and be flushed into history's toilet. But they are not doing the one thing that would really bring those two ideas together: Tax Gasoline...heavily.
$2/gallon would be the minimum, and it should increase by 2% or so a year. The problem with just raising CAFE standards is that making vehicles get better mileage does not make people want to own them. Higher mileage vehicles are slower, smaller, and--thanks to the simple physics of mass--inherently less safe for the occupants.
The one thing that the 2008 spike in gas prices proved is that the only way to change the behavior of US consumers when it comes to choosing a car (and how much they drive) is for gas to go over $4/gallon. That's the only way to affect behavior. It would increase demand for low mileage vehicles and automakers could start to see the % profit on those that they had been enjoying on SUVs. It would drive innovation, shift production, and all without the nasty government forcing auto makers to do anything.
Of course it is also a tax hike, and people will go apoplectic over it, and politicians will have a hard time getting (re)elected, and it is middle class regressive (rich won't feel it much, and many poor don't have cars), so it won't happen, no matter how much of a good idea it is, no matter how much it may be needed to reduce our energy consumption.
2 comments:
Jacob,
great post - people often forget that the reason small cars dont sell well is not that Detroit cant make them (they can), its because people (myself included) dont want them! Safety is one part of it, although there are other components (mostly looking cool)...
That tax would change that (bahavior), but it is political suicide, as you stated (and not just because of those "republicans"). Obama said:
“I can make a firm pledge, under my plan, no family making less than $250,000 a year will see any form of tax increase. Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes.”
I want to know if people believe this pledge, or not. We can debate wether the the cigarette tax fits under this pledge or not (people resopnd with "stop smoking"), but I think a gas tax would clearly violate this pledge.
Neither party deals well with taxation. Republicans use new or increased taxes as a bludgeon against democrats, and democrats being so fearful tend to instigate bad taxes (like cigarette and lotto) rather than good ones (like gas and cap gains).
As for keeping the pledge and upping the gas tax...it could be done a few ways, but none of them easy any all of them bureaucratic nightmares. Either rebating gas taxes paid to people earning under $x, or by cutting other taxes (like income) to make it a net no change, but even that would have to deal with averages.
The real way this would be settled is to say that the "under my plan" part referred specifically and only to *income* taxes. I'd buy that as I generally feel that any politician's statements should be read like monkey paw wishes: be specific, or else.
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