Blast from the Past: Raise the Gas Tax

In October of 2006, on the eve of the midterm election, economist Greg Mankiw, chairman of the Council of Economic Advisers under President George W. Bush from 2003 to 2005, spewed forth this "heresy" on the pages of the Wall Street Journal.

It seems even more heretical today given the rising cost of oil and its derivatives. Yet the U.S. has been living on borrowed time since, probably, the early 1970s.

The multiple conflict among energy, the environment, food supply and the economy is quickly coming to a head.

Cassandras like Mankiw become more and more plentiful. Unfortunately, ostriches like the majority of the American people and — even worse — their bought-and-paid-for politicians dig their heads further and further into the sand. Will this country be able to act in time to soften the inevitable crisis?

Perhaps only Cassandra knows.

What Mankiw had to say in 2006:

Raise the Gas Tax
By N. GREGORY MANKIW
October 20, 2006

With the midterm election around the corner, here's a wacky idea you won't often hear from our elected leaders: We should raise the tax on gasoline. Not quickly, but substantially. I would like to see Congress increase the gas tax by $1 per gallon, phased in gradually by 10 cents per year over the next decade. Campaign consultants aren't fond of this kind of proposal, but policy wonks keep pushing for it. Here's why:

The environment. The burning of gasoline emits several pollutants. These include carbon dioxide, a cause of global warming. Higher gasoline taxes, perhaps as part of a broader carbon tax, would be the most direct and least invasive policy to address environmental concerns.

Road congestion. Every time I am stuck in traffic, I wish my fellow motorists would drive less, perhaps by living closer to where they work or by taking public transport. A higher gas tax would give all of us the incentive to do just that, reducing congestion on streets and highways....

The budget. Everyone who has studied the numbers knows that the federal budget is on an unsustainable path. When baby-boomers retire and become eligible for Social Security and Medicare, either benefits for the elderly will have to be cut or taxes raised. The most likely political compromise will include some of each. A $1 per gallon hike in gas tax would bring in $100 billion a year in government revenue and make a dent in the looming fiscal gap....

Is it conceivable that the policy wonks will ever win the battle with the campaign consultants? I think it is. Even after a $1 hike, the U.S. gas tax would still be less than half the level in, say, Great Britain, which last I checked is still a democracy. But don't expect those vying for office to come around until the American people recognize that while higher gas taxes are unattractive, the alternatives are even worse.

Mankiw has gone on to back the carbon tax. For more on his thoughts, his blog is here.