I got an e-mail from Jill Long-Thompson asking me to sign her petition supporting a cap on gas sales taxes when fuel reaches $2.75 at the pump. More learned folks than I have critiqued the marginal effect of this cap in terms of consumer savings, but as readers of this blog know, I disapprove of this effort for a different reason - incentives.
In a prior entry, I stated that until Americans realize gas is going to STAY at $4 per gallon, they have no incentive to (a) stay in the cities where they work (thereby avoiding insane suburban sprawl) or (b) buy fuel efficient vehicles. Congress has no incentive to mandate such vehicles or create a national energy policy. Remember how we said we needed an energy policy under Jimmy Carter? As soon as gas dipped under a dollar a gallon, we reverted to our merry consuming ways. Now it's time to pay the piper.
I agree with JLT that consumers are getting socked by both higher gas prices AND a higher sales tax. But on some things, you have to feel the pain before you'll take the appropriate action. Here's an idea. Let's just repeal the new sales tax and....oh, wait. We just increased that, didn't we?
Look, folks, sometimes you have you switch stream midcourse. Conservatives and those who oppose ethanol and other grain-based fuels are taking great delight in news that, at least in part, rising food prices are the result of diverting grains into fuel production and away from eating. CNN's dire prediction is that if we continue to do this, we could create a worldwide famine. Rush Limbaugh yesterday acted like he was almost happy to hear that an environmentalist idea was going to lead to a lot of death.
But what ever happened to supply and demand? Isn't it true that if gas STAYS at $4 per gallon, the ethanol that comes from corn, which is grown IN INDIANA, becomes profitable for the first time ever? And isn't it true that if the value of grain goes up because we're using it for fuel instead of eating that the production of grains will increase over time as new companies or individual enter the market to meet increased demand?
It's funny how Republicans love free market philosophy until its principles can be used to counter what they want to happen. It's also funny how Rush Limbaugh is always assailing liberals for being all "doom and gloom" on global warming, but he's more than willing to embrace the speculation of a global famine just because Sam's Club is now limiting your purchase of Jasmine rice to four packages.
It's high time Americans realize that every time we change incentives, we can literally rejigger that entire world. Things are that inter-related.
JLT's plan will break a link in the energy policy incentive chain. While it will be good for those who eat a lot of Rice Krispies, it won't be good long-term for Indiana or America.
As an aside, here are two lines from JLT's e-mail:
"As fuel prices near record highs, the new higher sales tax hit folks with a double whammy."
"Click here to sign my petition to lower the sales tax on gas. Tell my opponents, "Gimme a break!"
I can't help but shake my head that our leading D gubernatorial candidate is using game show jargon (double whammy??!?) and slang spellings ("Gimme") to discuss dire economic consequences. This is only marginally better than listening to a commentator on CNN say on Tuesday night, "Like, WHAT is up will Bill Clinton?" Sorry, but when did we give our news channels over to 17-year-old high school girls?