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Column: Gas tax hike would be a "win, win, win, win, win"

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  • 12/27 New York Times
    Published Saturday, December 27, 2008, by the New York Times Column Win, Win, Win, Win, Win ... By Thomas L. Friedman How many times do we have to see this
    Message 1 of 1 , Dec 31, 2008
      Published Saturday, December 27, 2008, by the New York Times

      Column

      Win, Win, Win, Win, Win ...

      By Thomas L. Friedman

      How many times do we have to see this play before we admit that it
      always ends the same way?

      Which play? The one where gasoline prices go up, pressure rises for
      more fuel-efficient cars, then gasoline prices fall and the pressure
      for low-mileage vehicles vanishes, consumers stop buying those cars,
      the oil producers celebrate, we remain addicted to oil and prices
      gradually go up again, petro-dictators get rich, we lose. I've already
      seen this play three times in my life. Trust me: It always ends the
      same way — badly.

      So I could only cringe when reading this article from CNNMoney.com on
      Dec. 22: "After nearly a year of flagging sales, low gas prices and
      fat incentives are reigniting America's taste for big vehicles. Trucks
      and S.U.V.'s will outsell cars in December ... something that hasn't
      happened since February. Meanwhile, the forecast finds that sales of
      hybrid vehicles are expected to be way down."

      Have a nice day. It's morning again -- in Saudi Arabia.

      Of course, it's a blessing that people who have been hammered by the
      economy are getting a break at the pump. But for our long-term health,
      getting re-addicted to oil and gas guzzlers is one of the dumbest
      things we could do.

      That is why I believe the second biggest decision Barack Obama has to
      make -- the first is deciding the size of the stimulus -- is whether
      to increase the federal gasoline tax or impose an economy-wide carbon
      tax. Best I can tell, the Obama team has no intention of doing either
      at this time. I understand why. Raising taxes in a recession is a
      no-no. But I've wracked my brain trying to think of ways to retool
      America around clean-power technologies without a price signal --
      i.e., a tax -- and there are no effective ones. (Toughening energy-
      effiency regulations alone won't do it.) Without a higher gas tax or
      carbon tax, Obama will lack the leverage to drive critical pieces of
      his foreign and domestic agendas.

      How so? According to AAA, U.S. gasoline prices now average about $1.67
      a gallon. Funny, that's almost exactly what gas cost on the morning of
      Sept. 11, 2001. In the wake of 9/11, President Bush had the political
      space to impose a gasoline tax, a "Patriot Tax," to weaken the very
      people who had funded 9/11 and to stimulate a U.S. renewable-energy
      industry. But Bush wimped out and would not impose a tax when prices
      were low or a floor price when they got high.

      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.

      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.

      Which one of these things wouldn't we want? A gasoline tax "is not
      just win-win; it's win, win, win, win, win," says the Johns Hopkins
      author and foreign policy specialist Michael Mandelbaum. "A gasoline
      tax would do more for American prosperity and strength than any other
      measure Obama could propose."

      I know it's hard, but we have got to stop "taking off the table" the
      tool that would add leverage to everything we want to do at home and
      abroad. We've done that for three decades, and we know with absolute
      certainty how the play ends -- with an America that is less
      innovative, less wealthy, less respected and less powerful.
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