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Pat Garofalo writes in an op-ed in US News & World Report that with the recent drop in oil prices, there's something policymakers can do that will offset at least some of the negative effects of the currently low prices, while also removing a constant thorn in the side of American transportation and infrastructure policy: Raise the gas tax. The current 18.4 cent per gallon [federal] gas tax has not been raised since 1993, making it about 11 cents per gallon today, in constant dollars. Plus, as fuel efficiency has gotten better and Americans have started driving less, the tax has naturally raised less revenue anyway. And that's a problem because the tax fills the Highway Trust Fund, which is, not to put too fine a point on it, broke so that in recent years Congress has had to patch it time and time again to fill the gap. According to the Tax Policy Center's Howard Gleckman, if Congress doesn't make a move, "it will fumble one of those rare opportunities when the economic and policy stars align almost perfectly." The increase can be phased in slowly, a few cents per month, perhaps, so that the price of gas doesn't jump overnight. When prices eventually do creep back up thanks to economic factors, hopefully the tax will hardly be noticed.
Consumers are already starting to buy the sort of gas-guzzling vehicles, including Hummers, that had been going out of style as gas prices rose; that's bad for both the environment and consumers, because gas prices are inevitably going to increase again. According to data from the U.S. Energy Information Administration, taxes last year, even before the current drop in prices, made up 12 percent of the cost of a gallon of gasoline, down from 28 percent in 2000. And compared to other developed countries, US gas taxes are pretty much a joke. While we're at it, an even better idea, as a recent report from the Urban Institute makes clear, would be indexing the gas tax to inflation (pdf), so this problem doesn't consistently arise. "The status quo simply isn't sustainable, from an infrastructure or environmental perspective," concludes Garofalo. "So raise the gas tax now; someday down the line, it will look like a brilliant move."
(Score: 2) by Thexalon on Friday November 14 2014, @01:30PM
Econ 101 says that when the price of something goes up, people buy less of it. That makes a certain amount of sense: if (for example) cheese is more expensive, I'm going to eat less of it and instead buy other cheaper food. If diamonds are more expensive, I'm likely going to choose to not buy them at all. This is good old supply and demand.
Econ 102 tells a more complicated story, though. There are 2 major reasons why the Econ 101 theory doesn't accurately describe reality:
1. If you increase the minimum wage, then those workers getting paid that wage now have more money in their pockets, which means that they can buy more stuff. This, in turn, means employers have higher sales, which will tend to offset the higher labor cost.
2. The businesses in question were already profit-maximizing before the minimum wage increase occurred. That means that all the steps you describe (laying people off, replacing people with automated systems, and doing what they could to make them work harder) are steps that the business would have already taken had it been possible for them to do so. If you were a business owner, what possible conditions would convince you to spend $25K a year on somebody who's job it was to sit around doing nothing useful?
When you look at states and even cities that have raised their minimum wage, there isn't a corresponding jump in unemployment, which would be strong (albeit not 100% airtight) evidence that the Econ 102 story is less wrong than the Econ 101 story (this is economics, so "less wrong" is about as good as you're going to get).
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