tag:blogger.com,1999:blog-9069354713843321730.post9178752086260109920..comments2023-10-01T09:22:37.695-07:00Comments on Economists for Obama: What to Do About Gas Prices?Don Pedrohttp://www.blogger.com/profile/15438565798505041042noreply@blogger.comBlogger17125tag:blogger.com,1999:blog-9069354713843321730.post-74092738144246728672008-09-04T19:16:00.000-07:002008-09-04T19:16:00.000-07:00It is relieving to see others believe gas prices s...It is relieving to see others believe gas prices should be high. It is the only way to encourage alternative energy development. However, I do not see how a tax rebate on gas is helpful. While the transition may be painful, and the lowest income earners will be least prepared to buy new efficient cars, I hardly believe we should subsidize use of gasoline. <BR/><BR/>Surely the administrative cost to distribute the rebate is a sufficient deterrent from this policy. At worst, we could spend the money better elsewhere to promote innovation rather than encourage stagnation. <BR/><BR/>As with any tax rebate, we pay for the collection and redistribution of the money. We can work much more efficiently and simply. Either tax and use the money, or dont. I dont want to pay just to have money returned to me.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-9069354713843321730.post-25596893956971399252008-07-06T11:39:00.000-07:002008-07-06T11:39:00.000-07:00Hah! if people want to save some money on Gas, Che...Hah! if people want to save some money on Gas, Check this out --> <A HREF="http://www.fuellegacy.com/flny" REL="nofollow">www.fuellegacy.com/flny</A>Wayvhttps://www.blogger.com/profile/13042722783245863248noreply@blogger.comtag:blogger.com,1999:blog-9069354713843321730.post-18169805629250333672008-06-26T03:13:00.000-07:002008-06-26T03:13:00.000-07:00I completely disagree with the opinions/proposals ...I completely disagree with the opinions/proposals on "What do About Gas Prices". Up front, I want to say that I'm not an economist. I am an engineer and farmer developing renewable energy biomass projects in the Southern U.S.<BR/><BR/>The reason for the current spikes in high gas prices is not a supply and demand problem with oil. The problem is a supply and demand problem with the U.S. Dollar currency.<BR/><BR/>The WSJ has an excellent article which shows a graph of a perfect correlation between the decreases in the Fed Funds rate versus the price of oil.<BR/><BR/>As the Fed tries to address one problem with the U.S. economy on capital liquidity, its creating another problem in the free fall of the U.S. Dollar in International Money Markets.<BR/><BR/>As the U.S. Dollar falls, International Money Funds are moving into commodity markets.<BR/><BR/>The true problem that no politician wants to address (except maybe Ron Paul) is basic kitchen table economics of "you can not spend more than you make".<BR/><BR/>While Democrats are labeled "Tax and Spend", "Spend and Borrow" Republicans with their Supply Side Economics are certainly no better.<BR/><BR/>What we need is (Gulp!) to amend the Constitution and let Bill Clinton run again. Clinton understood this economics stuff, balancing the federal budget on his watch. This is why Alan Greenspan describes Clinton as the best Republican President in recent history.<BR/><BR/>My economic proposal of "what to do about Gas Prices" are:<BR/><BR/>(1) Balance the Federal Budget.<BR/><BR/>(2) Apply Federal Payroll taxes on all income (no cap) until the Federal Budget is balanced. Use the additional tax revenue to retire U.S. Debt -- which will increase the value of the U.S. Dollar.<BR/><BR/>Personally, I don't believe Obama or McCain understand economics very well.<BR/><BR/>Steve from FloridaAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-9069354713843321730.post-70453700333214859872008-06-07T21:48:00.000-07:002008-06-07T21:48:00.000-07:00That's right the democrats are going to be the sav...That's right the democrats are going to be the saviors of the world, and will fix all of our problems. You want to base our economic policies on your unfounded fear of global warming. There is no concrete evidence that our planet is on a warming trend. Much of the data we have shows that the earth has actually cooled one degree over the past one hundred years. Not to mention we had one of the coldest winters in decades last year. Any data we do have that does say the earth is on a warming trend can’t pinpoint whether it is manmade or just a natural occurrence. I would like to point out that the environment has warmed and cooled all throughout earth’s history. <BR/>You think it is good for the world to have high gas prices, but you aren’t taking into consideration all of the consequences that comes along with it. As the cost of gas rises it cost more for every single industry in the U.S. to operate causing massive inflation, job losses, and ultimately a recession. It will affect world food production increasing world poverty. Americans, who donate more money than any country in the world, will have less or be more apprehensive to donate money to charities around the world causing more starvation. Not to mention the millions of dollars that Americans donate to the many different disease research organizations. Then again liberals think bigger even more inefficient government , and higher taxes are the answers to all our problems.Unknownhttps://www.blogger.com/profile/09337477338659965612noreply@blogger.comtag:blogger.com,1999:blog-9069354713843321730.post-20801113789243394652008-06-05T16:59:00.000-07:002008-06-05T16:59:00.000-07:00I think we need revenue-neutral taxes on fossil fu...I think we need revenue-neutral taxes on fossil fuels and they should be very, very simple. No fancy formulas that can lead to mistrust by the public, or plundering by special interests.<BR/><BR/>Place a big tax on all fossil fuels of $x per BTU and rebate 100%of the revenue to the public equally per capita. Every man, woman and child gets 1/300 millionth of the revenue collected.<BR/><BR/>Same for any cap and trade system for carbon: Auction every permit, give none away free, and rebate 100% of the revenue on an absolutely flat, reverse-head-tax basis.<BR/><BR/>Do your redistribution of wealth and your investment in R&D through some other means. Don't mix issues. The American public needs to be led to a sharp focus on the fact that relative prices need to be fixed to internalize the externalities (obviously, translated from jargon to plain English when presented to the public).Jim Lucketthttps://www.blogger.com/profile/12179256785209734139noreply@blogger.comtag:blogger.com,1999:blog-9069354713843321730.post-88391127296544947672008-05-01T19:53:00.000-07:002008-05-01T19:53:00.000-07:00How about, we just confiscate all cars, and have t...How about, we just confiscate all cars, and have the bureaucracy dictate which car you can drive on which day, and how many miles you may drive it? Karl Marx would be proud!!Unknownhttps://www.blogger.com/profile/04344138237042703239noreply@blogger.comtag:blogger.com,1999:blog-9069354713843321730.post-67855678834577963662008-05-01T12:27:00.000-07:002008-05-01T12:27:00.000-07:00Note that the cost of "gas" in an Electric vehicle...Note that the cost of "gas" in an Electric vehicle is 89 cents per gallon. Note also that these electric vehicles include Cadillac Escalade Hybrid, and Ford Escape SUVs. They are not golf cart wannabes- these are the vehicles that Americans love and prefer not to be told they can't have.<BR/><BR/>The main barrier to adoption of these vehicles is that for them to have batteries large enough to run for more than a mile or two on electricity, the cost of the vehicle would be $6000 to 10K more.<BR/><BR/>Sure, if folks did the calculation they would see that due to the savings in fuel, the battery would pay for itself over several years. Problem is, most consumers don't make decisions that way.<BR/><BR/>Economic solutions must focus on this reality. It's a simple financing proposition, and it's revenue neutral. <BR/><BR/>Prong 3: Like Federal student loans, a car buyer is offered a federal battery loan that covers the entire cost of the battery. The loan is recovered through surcharges on the electricity used to recharge the battery. All surcharges are pooled between consumers so that everyone's batteries are paid off whether they are a heavy driver or not. Surcharges are added at a discount to the current price of gas, so that consumers always get a better deal than if they were using gas.<BR/><BR/>For full switchover to electric vehicles, national power generation must increase by 25%. This increases the income for utilities substantially. The catch is that for all power going to electric vehicles, utilities must build alternative energy sources to cover the new demand. They are guaranteed 35 cents per KWH so they will be assured of a handsome margin on this investment. The higher KWH price comes out of the surcharge.<BR/><BR/>Metering is done using EVDO communication from a cellphone processor on a chip embedded in the battery. The battery refuses to recharge if it has not been able to contact the utilities' website and get authorization within the past N days. So if the user doesn't pay their bills, tough break. Chip cannot be bypassed for direct charging since it is fused into the battery itself. Surcharges go away when the battery payoff period expires, and everyone gets 89 cent "gas"*.<BR/><BR/>How does that sound? I am a member of an economic development committee for my state's democratic party and am proposing this as a policy position for legislation in my state.<BR/><BR/>*89 cent "gas" price assumes the national average of 10 cents per KWH.Mak Thorpehttps://www.blogger.com/profile/11476450793491493912noreply@blogger.comtag:blogger.com,1999:blog-9069354713843321730.post-23593384107272365972008-05-01T09:47:00.000-07:002008-05-01T09:47:00.000-07:00Thanks Jonah [n/t]Thanks Jonah [n/t]Brookshttps://www.blogger.com/profile/12101311784358010151noreply@blogger.comtag:blogger.com,1999:blog-9069354713843321730.post-39972914862763799862008-05-01T09:29:00.000-07:002008-05-01T09:29:00.000-07:00andy--thanks for your comment. my sense is that yo...andy--thanks for your comment. my sense is that you're right about the broad-spectrum point in terms of policy advisers. i hope that policy*makers* on the right (and the left, given all their recent gas-price demagoguery) will join in soon.<BR/><BR/>david--i'm not married to the idea that only people with cars get the rebate, tho it gets harder to sell it as specifically a *gas* price rebate if you don't limit it that way. but i don't see this as a critical issue (one could always also condition the rebate on having owned a car by January 1, 2008, or something).<BR/><BR/>brooks--thanks for your second comment. i have no particular sense that 18.4 cents is optimal, except that it's been historically way too low for the reasons i gave in my post. as long as the rebate is big enough to offset ag demand slowdown, you can increase the gas tax now if you want (but good look getting that one done in this climate).Jonah B. Gelbachhttps://www.blogger.com/profile/16937666641251545988noreply@blogger.comtag:blogger.com,1999:blog-9069354713843321730.post-37942784600212385772008-04-30T17:05:00.000-07:002008-04-30T17:05:00.000-07:00Jonah,Thanks for your replies.The political calcul...Jonah,<BR/><BR/>Thanks for your replies.<BR/><BR/>The political calculation is sensible.<BR/><BR/>Re: your secondary argument/rationale for delay -- "that a broad-based tax increase during a recession is generally bad demand-side policy" -- that touches on the reason I asked the question. I was wondering if your rationale for delay was that we wouldn't want to raise the gas tax during a recession (for Keynesian, aggregate demand reasons, and perhaps also for humanitarian reasons). If that's part of your rationale (and it seems to be, but please correct me if I'm misinterpreting), then the question is "What is ideal about 18.4 cents/gallon?" from that perspective? In other words, if it's bad to RAISE the gas tax during a recession, then why isn't it good to LOWER the gas tax in a recession, unless the current tax rate is, for some odd reason, ideal?<BR/><BR/>I realize that your rationale is broader than the "recession" consideration, and that the political considration is your primary rationale for delay, but I'd be interested in your answer to my question regarding your secondary argument.Brookshttps://www.blogger.com/profile/12101311784358010151noreply@blogger.comtag:blogger.com,1999:blog-9069354713843321730.post-43348938012435088912008-04-30T17:02:00.000-07:002008-04-30T17:02:00.000-07:00I kind of like we're you're going with this - but ...I kind of like we're you're going with this - but the idea that you get a tax rebate if you own a car but not if you don't jars with me (yes I realise the theory is that you're just getting back some of what you already paid in gas tax). So a family with two cars gets two lots of rebates but the family who has made do with one car gets only one? Wouldn't this just encourage families to go out and buy that second car they were dithering about? Wouldn't it encourage someone who gets by without a car to buy one?David Jefferyhttps://www.blogger.com/profile/11826563619710355534noreply@blogger.comtag:blogger.com,1999:blog-9069354713843321730.post-784645707603803932008-04-30T15:43:00.000-07:002008-04-30T15:43:00.000-07:00Nice post. I don't think that "the man in the hat...Nice post. I don't think that "the man in the hat's" proposal of taxing the profits of the automakers specifically is a viable strategy, since those profits will likely be small or negative for quite a while.<BR/><BR/>I think you could simply stipulate that the rebate itself is taxable as income, so that some of its cost is recouped. You could also design it to be revenue-neutral by increasing income tax rates as needed.<BR/><BR/>That's the sort of green tax swap that has broad intellectual support across the political spectrum. You would be in league with AEI and Greg Mankiw, for example, disagreeing perhaps only on how progressive the income tax increases would have to be.Andrewhttps://www.blogger.com/profile/13514024573333057559noreply@blogger.comtag:blogger.com,1999:blog-9069354713843321730.post-36460904985571941792008-04-30T14:52:00.000-07:002008-04-30T14:52:00.000-07:00just to be clear, i did originally say "until the ...just to be clear, i did originally say "until the economy improves", and i also just wrote that i'm ok with waiting until after the election. obviously those timelines needn't coincide exactly. that said, i'm guessing that they'll be pretty close. also, another point, one i originally had in mind but didn't address in my reply to you just now, is that a broad-based tax increase during a recession is generally bad demand-side policy. (by contrast, raising taxes on upper income folks generally has relatively little short run ag demand impact, but the gas tax is broad-based.) <BR/><BR/>so there's a short run-long run tradeoff, which i resolved in favor of the SR in my original post. but it's arguable that a revenue-neutral policy of increasing gas taxes and giving correspondingly higher lump-sum rebates would cure the SR demand-side problem. so in principle, the political feasibility issue is the bigger reason.Jonah B. Gelbachhttps://www.blogger.com/profile/16937666641251545988noreply@blogger.comtag:blogger.com,1999:blog-9069354713843321730.post-54605738173100019092008-04-30T14:47:00.000-07:002008-04-30T14:47:00.000-07:00brooksi recommend waiting because i recognize that...brooks<BR/><BR/>i recommend waiting because i recognize that legislative decisions have to be made by legislators, most of whom (all but 66 or 67 senators) have to run for re-election between now and November. Basic realism suggests that what you suggest would make that re-election harder and therefore garner no support. After the election is over, things will be easier. Yes, this is a purely political calculation. But you know that old line about not letting the perfect be the enemy of the good....Better to do something good in a few months than never to do it at all.Jonah B. Gelbachhttps://www.blogger.com/profile/16937666641251545988noreply@blogger.comtag:blogger.com,1999:blog-9069354713843321730.post-10243572089074376252008-04-30T12:03:00.000-07:002008-04-30T12:03:00.000-07:00Jonah,You recommend "No change in the gas tax unti...Jonah,<BR/><BR/>You recommend "No change in the gas tax until the economy improves."<BR/><BR/>Why do you oppose raising the gas tax now in conjunction with the rest of your recommendations? Why wait on your recommended policy "until the economy improves"?Brookshttps://www.blogger.com/profile/12101311784358010151noreply@blogger.comtag:blogger.com,1999:blog-9069354713843321730.post-61320905094748200042008-04-29T14:40:00.000-07:002008-04-29T14:40:00.000-07:00man in the hat:you can achieve all the same result...man in the hat:<BR/><BR/>you can achieve all the same results of your proposal with the gas tax itself. your proposal has the advantage that it might be politically more palatable than a further increase in the gas tax. on the other hand, it would likely go over poorly in michigan, a state the dems need to win. so on political grounds there are pros and cons. <BR/><BR/>as for incentives for the auto industry, shifting consumer demand is certainly one such incentive! <BR/><BR/>i definitely do agree on light rail.<BR/><BR/>say hi to your lovely wife for me<BR/><BR/>jJonah B. Gelbachhttps://www.blogger.com/profile/16937666641251545988noreply@blogger.comtag:blogger.com,1999:blog-9069354713843321730.post-23719254821326059492008-04-29T14:34:00.000-07:002008-04-29T14:34:00.000-07:00Nice analysis Gelbach, but how about another prong...Nice analysis Gelbach, but how about another prong? Fund the rebate by taxing the profits of automakers, with a tax whose base rate is multiplied by the average gas mileage of their vehicles sold in the tax year. As they shift away from marketing gas guzzlers to avoid taxes, the average cost of the gas consumers' rebate will also fall AND we will actually be consuming less gas per vehicle mile.<BR/><BR/>Then what we really need is some further incentives to get the auto industry to move away from cars altogether and reinvest in the light rail systems they systematically acquired and shut down almost a century ago in many US cities.The Man in the Hathttps://www.blogger.com/profile/17744852883614967539noreply@blogger.com