Obama Could Miss the Bus on Raising Gas Tax
December 18, 2008
As supporters of Barack Obama celebrated around the world on November 4, climate activists were particularly moved to hear him declare that helping a "planet in peril" would be one of his administration's top priorities.
Since then he has restated his commitment to renewing America's leadership in international climate negotiations, and he has pledged to pioneer a "hybrid economy" where protecting health and the environment is not at odds with prosperity.
But as the election elation fades, recession deepens, and the transition team plows through its roster of appointments, Obama is missing the bus on an obvious upgrade in U.S. transportation policy: raising the federal gasoline tax.
The urgency of the climate problem grows every day we delay. Global mitigation efforts will have to be accelerated over the next two decades in order to have any hope of stabilizing atmospheric carbon dioxide, which has already jumped well beyond the stable range that was naturally maintained over the past 650,000 years.
Researchers at MIT's Joint Program on the Science and Policy of Global Change have calculated a risk model they call the Greenhouse Gamble to illustrate the probability of global average temperature rise during the 21st century. Under a business-as-usual scenario without significant climate policies, they forecast a 50-50 chance of avoiding the catastrophic levels of warming identified by the Intergovernmental Panel on Climate Change.
In a similar effort, Stephen Pacala and Robert Socolow at Princeton University have outlined a strategy for stabilizing emissions by midcentury, mostly through the use of existing technologies. Primary among their recommendations is the low-hanging fruit of energy efficiency, specifically the use of fuel-efficient vehicles. A strong stance by the Obama administration on raising the national gasoline tax would prove to be a profound motivator for this industry.
Fighting the climate crisis will be as much about engineering new incentives as it will be about engineering new technologies, and there are few incentives as reliable as price. This was made clear when the recent fuel price spike sparked a significant shift away from cars and toward public mass transit.
Obama has criticized the way our economy moves from "shock to trance" when prices fall and we renege on breaking our addiction to oil, yet he also asserted that it would be a "mistake" to increase the gasoline tax because doing so would hurt the poorest people most at a time when they are already struggling. Trying to depoliticize the issue in this manner plays right into the traditional pattern of Washington pandering that Obama has promised to end. It is not the mandate for change that his voters gave him. They voted for honesty, which is what Obama delivered during the primaries when he dismissed the idea of a gas tax holiday.
Going forward, structural aspects of our economy such as fuel must be political issues, especially when they pertain to problems like climate change that have disastrous global consequences. The people of island states that will be swallowed up by rising sea levels are not concerned with whether a particular ton of carbon dioxide was generated by a rich American or a poor American. They care about whether America is doing all it can to stop global warming. An attitude of reciprocity along these lines is essential for solving the problems of acting collectively across national boundaries.
At the same time, Obama is obviously not in the business of making poor people poorer when real median household income has already dropped 0.6 percent during the Bush years. This is where Obama could wield his budget scalpel to graft expenses and revenues from one column to another. He has expressed willingness to analyze the budgets line by line, and hopefully he will do this in a manner that alleviates pressure on the middle class and generates the price incentives to wean us off fossil fuels.
In the long run, figuring out a better link between consumption and government budgets is a good idea, but the relationship can be used in the meantime to leverage smart transportation policies. A Brookings Institution study points out that total vehicle miles traveled fell recently for the first time ever, while the federal gas tax has not budged since 1993, nor has it been indexed for inflation. The combination of these factors puts national and state transportation budgets at risk of being underfunded. As a result, we see maneuvers such as Governor David Paterson's recent proposal to lift the cap on New York state gasoline tax.
Although the auto industry bailout is stuck in neutral, raising gas tax revenue could be useful in this regard. With the United States consuming 390 million gallons of gasoline per day, a $25 billion bailout of the U.S. automobile industry could be paid for within a year by roughly doubling the current federal gasoline tax—from 18.4 cents to 36.0 cents. Interestingly, the Congressional Budget Office estimated in 2004, when gasoline prices were about the same as they are today, that a 46.0 cent increase in the gas tax would lead to a "10 percent reduction in gasoline consumption," at a lower cost than a comparable increase in Corporate Average Fuel Economy standards.
The U.S. auto industry has a long history of lobbying against these and other policies to the detriment of public welfare, essentially slashing their own tires by pushing for low standards. The Big Three paid for lobbyists when they should have been paying for research and development—European cars already surpass the mileage standards that American manufacturers must meet in 2020.
Raising the gasoline tax strikes at the root of what is essentially a mobility problem. Just as a warming climate and shifting weather patterns will lead to a significant extinction of species that are unable to move or adapt, extinction may also await major companies and entire nations if we fail to innovate. Instead of accepting this fate, Obama should lead America to a better mobility infrastructure and to one extinction that would be welcome: that of the internal combustion engine.
So while the auto industry is on its knees, set to siphon funds from the public coffer, President-elect Obama should take this opportunity to simultaneously help them and enforce some consumer discipline. Otherwise the only shovel-ready American project will be a giant auto graveyard.