How many of you are startled and even a bit frightened at the lack of attention the rapidly worsening global warming crisis is receiving in the U.S. in particular? Yes, there is vague talk from the incoming U.S. President about global warming, but, in fact, the U.S. government is trying everything in its power to boost consumption and raise housing prices in an effort to reignite the housing bubble. Obama is talking about massive infrastructure programs and yet, when you examine the plans, it is largely about building highways with some money for energy conservation in government building retrofits. All of this will be done on a wave of deficit spending that is likely to pauperize the remaining U.S. middle class.
Highway building and energy conservation measures will fail to rein in global warming because hydrocarbon energy is too inexpensive in the U.S. Odd isn’t it, only six months ago, because of the price increases, the U.S. was treating energy conservation as a serious topic. Miles driven were dropping, people were demanding better mass transit, and the move back to the city was being celebrated. The price mechanism was addressing the global warming problem, though it did affect the poor disproportionately. Today, with gasoline prices down, miles driven are increasing, and once again traffic jams and the behemoth SUVs are back.
There is an obvious measure that can address our fiscal deficit and global warming – raise gas taxes, say $0.50 immediately, then after three months another $0.25, and again another $0.25 in another three months (the more one increases, the stronger the signal to consumers is). The phasing in of the increases would provide warnings to auto buyers to choose more fuel-efficient vehicles. This would be a serious response to global warming and the fiscal deficit, but there are no voices demanding such an obvious policy.
You don’t need to be a member of the Creative Class to see how disconnected from reality the policy discussions in Washington, D.C. are. No discussions of raising taxes to address an enormous and spiraling deficit. No discussions of serious policies to discourage the consumption of fossil fuels. The U.S. is today operating on what I term “crackpot optimism,” which I will discuss further in future posts.
December 16th, 2008 at 6:41 pm
Sorry, but when you’ve got 40% of the population in this country don’t even believe in evolution, you have a number of people who just don’t understand science. It’s no wonder at all, really.
December 17th, 2008 at 8:43 am
You stated that “The price mechanism was addressing the global warming problem, though it did affect the poor disproportionately”. The biggest problem with your plan of increasing gas taxes causes the same end result; disproportionately affecting the poor. Not even to mention the fact that increased taxes will create even more market disruption. You’ve got to either say that you’d rather not disproportionately affect the poor by letting the market decide what to do with oil prices, or you’ve got to let the government choose winners and losers and, in turn, hurt the poor through increased costs for basic necessities like fuel.
December 17th, 2008 at 9:32 am
I agree with Martin. It was… refreshing… how energy efficiency was suddenly back in conversation over the summer, after a 30 year absence. And it is disheartening to see how quickly it has disappeared from the conversation now that gas prices are the lowest they’ve ver been, adjusting for inflation.
I also agree that a higher gas tax is the way to go, with the caveat that other taxes need to be eliminated in order to make his proposal revenue neutral. To help the poor, I recommend eliminating the payroll tax.
The quickest way to make the economy more “carbon efficient” is to increase taxes on the carbon, and eliminate taxes on work and investment. Then let substitution do its work.
December 17th, 2008 at 10:36 am
Given that Socvial Security and Medicare both face large deficits, we need to be careful about sending a signal that we can lighten the burden of retirement taxes. However, I agree with the concept that gas taxes need to go up (I suggest 2 cents per month until they reach $1.00 a gallon)to pay the first $1,000 of combined SS and Medicare taxes. Funds collected above the amount dedicated to SS should be dedicated to improved electric transmission networks and wind power generation.
December 17th, 2008 at 11:06 am
I agree with the idea of having tax on gas/oil so long as it’s not passed on to the UN for wealth redistribution. Any additional taxes should stay here in the US to pay down deficits,fund social security.
I can always count on Martin to say something that I don’t agree with though, and that’s this myth of global warming. But today’s a good day and I don’t want to waste any of it arguing with you.
Ditto that with Swordsman. When you can explain to me how nothing+time+chance=everything maybe I’ll consider your “theory.”
December 17th, 2008 at 4:50 pm
Fred, there is no reason that retirement and payroll taxes be linked in any way. We could totally pay retirement benefits from gas taxes if we wanted to.
I mean, right now, payroll taxes bring in more money than is spent on retirement benefits. The excess is spent on other things like bridges to nowhere, wars of aggression, welfare, etc.
I think that we, as Americans, need to change our ways. We need to work harder, work longer, borrow less, save more, export more, import less, and generally consume less than we produce. Switching from payroll/ income taxes (which discourage work) to consumption taxes like a gas tax and a VAT would help in that regard.
December 18th, 2008 at 12:17 am
Great above 5 responses. The only disagreement I have with any of the above is that a consumption tax to replace the current income tax would have to be about 36% and would therefore be unworkable. It would work as a partial replacement or supplement, however.
December 18th, 2008 at 9:01 am
That’s why I’m a huge fan of the Fairtax. If you think you are paying less in taxes in a payroll/income scheme you are mistaken. At least in a consumption tax system, taxes are transparent and you will know what you actually pay. Everyone pays an embedded 22% in everything they buy (as it is now), not to mention the 10% in taxes you already pay off the top on utility bills.
December 18th, 2008 at 12:52 pm
Jim, sorry, but the Fair Tax numbers don’t add up. Please see my blog for a deconstruction of it.
December 18th, 2008 at 1:09 pm
Hi Folks,
I am heartened that you folks are talking about tax policy. In my estimation, tax policy is probably the most important single thing a government (particularly national) can undertake. Gasoline taxes encourage certain behavior, consumption taxes other behavior, mortgage interest write-offs still other behavior. Parenthetically, mortgage interest write-off is in my opinion a pernicious tax dodge that encourages over investment by a society in housing, which is consumption (i.e., of the structure) not savings contrary to the stupidity that the politicians and national income accounts call it. The land portion also ties up capital in unproductive landlordism.
So tax policy is absolutely vitally important and almost totally undiscussed by liberals and conservatives alike. It also is where the lobbyists concentrate enormous efforts, i.e., increasing the kleptocratic tendencies in DC.
Thanks for the wonderful comments.
December 18th, 2008 at 2:13 pm
For there to be a worsening global warming crisis, there has to be a global warming crisis to begin with. There has been warming, but lately there has been some cooling also. It may be a crisis to policy makers as to how much and how soon to buy into the warnings. However, the negative effects on the planet that can be directly contributed to warming have not so far outpaced the positive effects as to warrant the use of the word “crisis” when describing the impact of global warming.
The crisis is theoretical. You may work to see that government policy change in order to avert that crisis, but gratuitously calling something a crisis smacks of fear mongering.
We may give our children a warmer world. But by dressing them in adult guilt over their carbon footprints, we are raising an electorate that will be defenseless against an overreaching bureaucracy; one that exploits the electorate’s belief that all aspects of the individuals carbon footprint, and thus of the individual’s life, are fair game when it comes to saving the planet.
Because what’s more important than saving the planet? Does any individual right…any human right.. ballance the need to save the planet? If nuking New York and everyone in it was proven by scientists to save the planet once and for all, should it be done?
It’s not a simple of giving the state the power to save the world once you realize that the power to save it is the power to rule it and as the power to destroy it. The only place where the global warming debate is over is among politicians. Is it too much to ask that creative people NOT be tools for politicians and look at all the science instead of only that which backs one’s particular view (which, in effect, isn’t science at all)?
December 18th, 2008 at 2:57 pm
Martin, I suspect we are totally on opposite ends of the political spectrum, but I agree with you on these tax issues, especially the mortgage interest deduction.
I agree that it would be very hard to completely replace the income tax or payroll tax with consumption taxes. But if they allowed us to move to a flat tax with no deductions, we would be far better off.
Again, we need a tax system that encourages work, savings, and getting an education (without specifically subsidizing those activites, as the current tax code does to some extent).
If we’re talking about unintended outcomes of our tax system, how about the fact that employer provided health insurance is tax free? Okay, maybe that’s too much of a tangent for the thread, but it has consequences very similar to the mortgage interest deduction i.e. way too much spending on health care.
December 19th, 2008 at 1:37 am
Is it possible to agree with both Martin and Buzzcut? Because I think I do, to some extent.
December 19th, 2008 at 10:06 am
Ok I checked out your blog. I had to hold my nose since the first things I noticed were links to Daily Kos & Huffington Post.
Here are your 2 main arguments:
1. they think they will have to pay less taxes under Fair Tax
or
2. they want to p–s off citizens and make people realize how eeeevil taxes are and therefore create a firestorm of anti-tax anger to shrink the size of government in general.
Nobody said that they would pay less with the fairtax program. The difference is that it would make what you pay transparent. Most people DON’T KNOW what they actually pay in taxes. That would change, and politicians would be hesitant to raise any taxes that everyone would see immediately.
The federal government absolutely should be smaller than what it is today. Period.
Taxes are not evil, but necessary – but excessive taxes are what WE ALL are stuck with right now.
I wish I had more time to thoroughly debunk you and your blog, but the clock is ticking, so maybe I’ll check your blog some other time. The most frustrating part about what I read on your page is your effort to make this a partisan issue. It shouldn’t be
December 19th, 2008 at 1:42 pm
The idea that Fair Tax will shrink government is inaccurate. And the idea that it should be shrunk is a different argument.
I am NOT trying to make this a partisan issue on here. This is why I linked to my blog instead of putting it on here. You can comment on the blog, you know…
And, you just validated my two arguments. Your support of the Fair Tax is predicated on paying less (less government in general) and in annoying enough people to get mad at taxation.