Roundtable on Raising the Gas Tax

Roundtable on Raising the Gas Tax

FOX News Special Report With Brit Hume - January 2, 2009


OBAMA: Our economy boomed in the 20th century when President Eisenhower remade the American landscape by building the Interstate Highway System. Now we need to remake our transportation system for the 21st century.

GEORGE BUSH, PRESIDENT OF THE UNITED STATES OF AMERICA: The price of gasoline has gone down substantially since July, which is akin to a stimulus package. I mean, if you amortize the savings for the average family over a 12-month period with the price of gasoline the way it is today, it's about $2,000 per family.


ANGLE: People save money, but many are now saying higher gasoline prices had an advantage. They encouraged people to use less energy, which meant less pollution and encouraged more energy-efficient cars.

The question before us now is can we have our cake and eat it too? Can we have higher gasoline prices and do it without hurting consumers?

And Charles Krauthammer is in favor of something called the net zero gas tax, which you argue, can, in fact, do that. What is it?

KRAUTHAMMER: "Yes, we can!"

And I'm glad you asked. I just happen to have written a very long article in "The Weekly Standard" on this, which I will condense to 60 seconds, which is you put on a very heavy tax on gas, let's say a dollar a gallon, and you refund it to the consumer, to the worker, by a reduction in the payroll tax, the Social Security tax, at the same time.

So the average American purchases about 14 gallons a week. He would be out $14. You have a reduction in exactly that amount in the payroll tax, so that he ends up even. The government doesn't increase its revenues, and the average driver is left whole.

The reason it's a good idea is because it has all the advantages of high prices--it encourages a change in habits, less driving, pollution, and a switch to fuel efficiency--and at the same time it doesn't impoverish the consumer and drain the economy.

And if America consumes less, it lowers the world price, and takes money out of the pockets of tyrants like Putin and Chavez and the Iranian mullahs, who have acted provocatively when they had a lot of oil funds in their treasuries.

ANGLE: About the surest explanation you are likely to hear on that proposal?

What do you think of it, Bill? There are advantages and disadvantages. What do you see?

KRISTOL: I think it is a very good idea. If I knew it could be summarized this quickly, we could have saved a few pages. It is worth reading the whole article in "The Weekly Standard."

I've been surprised how much interest there is in this. It turns out lots of people have been for this on the left and right. Al Gore, I was slightly horrified to discover, proposed a version of this, a swap of all payroll taxes for what he calls a "pollution tax."

I think it does makes sense. To tax things we want to discourage people from doing and not tax less things you want to encourage people. We have a payroll tax that taxes work, it taxes employers and employees, and we don't have much of a gas tax.

So we don't tax the consumption of driving cars, which as Charles, said, has all kinds of negative externalities, especially, I think, getting more revenues to regimes like Russia, Venezuela, and Iran.

ANGLE: About a minute left. Jeff, one of the problems is that we through CAFE standards and so forth try to force the auto companies to make cars that are more energy efficient, except that when the price of gasoline goes down, people don't want to buy them. They want SUVs.

BIRNBAUM: Yes. And I'm not sure it's the best use of the tax code, with all respect, Charles, to try to encourage different kinds of behavior.

I think the best use of the tax code is to get taxes as low as possible and tax rates as low as possible so people will allow the market to make selections, which I think they will naturally do. On the issue of energy, I think there will be overall an incentive for more conservation because the price of energy is necessarily high.

In addition, I think that you don't want to have a net zero tax at a time that you actually need deficit spending like you do right now to give the economy a stimulus, and a lot of the money that would go from the energy tax would go to the kinds of highway and bridge construction that the economic stimulus package will actually do without paying for it in the next month or so.

For more visit the FOX News Special Report web page.

FOX News Special Report With Brit Hume


Follow Real Clear Politics

Latest On Twitter