Protecting the Poor from the Media’s Gas Tax

Why do so-called progressives seem eager to ignore the real needs of the poor? A recent example was the New York Times editorial calling on President-Elect Obama to institute a random gasoline tax to keep gas prices from dropping below $4 per gallon (in 2008 dollars) to “curb the nation’s demand for energy.” The proposal is fraught with problems, not least of which would be its impact on those who can least afford it.

In “The Gas Tax,” the Times editors say, “it might be time for the president-elect and Congress to think seriously about imposing a gas tax or similar levy to keep gas prices up after the economy recovers from recession.”

This lunacy fits a pattern. In a December 7 interview with President-Elect Barrack Obama on NBC’s Meet the Press, Tom Brokaw suggested, in light of dropping fuel prices, that government should “take this opportunity to put a tax on gasoline, bump it back up to $4 a gallon where people were prepared to pay for that, and use that revenue for alternative energy and as a signal to the consumers those days are gone.”

Why is it that the most prominent media voices seem so ignorant of the economic consequences of their social experiments?

Obama responded, “Well, keep, keep in mind what’s happening in — to families all across America. Yes, gas prices have gone down. But, in the meantime, maybe somebody in the family’s lost their job. In the meantime, their housing values have plummeted. In the meantime, maybe their hours have been cut back. Or if they’re a small-business owner, their sales have gone down 50, 60, 70 percent. So putting additional burdens on American families right now, I think, is a mistake.”

Obama has better economic common sense than journalists on this point. Why needlessly hurt lower-income Americans with a “consumption tax” disproportionately making life worse for rural and inner-city residents, ethnic minorities, single-mothers, and other struggling Americans? While those who enjoy high salaries like Tom Brokaw, the editors of the New York Times, and other like-minded social experimenters may not feel the pinch, “bumping up” gas prices in a recession seems simply immoral.

The editors of the Times might gain some insight by reading their own newspaper. On June 9, 2008, the Times published, “Rural U.S. Takes Worst Hit as Gas Tops $4 Average,” reporting the painful reality of rural Americans suffering because of high gas prices.

The article tells the story of Anthony Clark, a farm worker from Tchula, Mississippi who said he prayed “every night for lower gasoline prices. He recently decided not to fix his broken 1992 Chevrolet Astro van because he could not afford the fuel. Now he hires friends and family members to drive him around to buy food and medicine for his diabetic aunt, and his boss sends a van to pick him up for the 10-mile commute to work.”

“As gas prices rise, working less could be the economically rational choice,” said Tim Slack, a sociologist at Louisiana State University who studies rural poverty. “That would mean lower incomes for the poor and greater distance from the mainstream.”

In a June 29, 2008 New York Times editorial, “Fuel for Inequality,” Robert Reich, former secretary of labor and professor of public policy at the University of California, Berkeley, explains why high fuel prices increase the wage gap between the haves and have-nots. Rural residents “tend to drive older cars that get lousy mileage. They don’t trade them in as often as wealthier people do, and can’t afford hybrids or new models that use gas more efficiently. And it’s not unusual for their jobs to require them to haul stuff from one place to another in pickup trucks or vans that guzzle even more gas.”

The original intent of the December 27 editorial was to propose a way to encourage Americans to purchase the fuel-efficient cars U.S. automakers promised as they received bail-out cash from tax payers, but the consequences hurt all Americans in the long run.

A mistaken gas consumption tax will not force Americans to buy automobiles we do not want from Detroit automakers who cannot compete with international companies technologically ahead of them. If the Times wants Detroit to produce more fuel efficient cars, automakers need to be challenged to make affordable vehicles that are better than their competitors from Europe and Asia. That kind of innovation, unlike tax-inflated gas prices, might actually benefit working class Americans, the people progressives are supposed to be looking out for.

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  • goral

    “…working class Americans, the people progressives are supposed to be looking out for.”
    I know Mr. Bradley that that’s a rhetorical statement which needs no explanation.
    Progressive, a kinder cousin than the other family members – liberals, elitists, socialists and communists, all of them revolutionaries.
    Revolutionaries are concerned with only one thing – progression in the direction of the revolution.

    Technology, affordability and working class are not the issues.
    Tom Brokaw will go the way of Walter Cronkite.
    And that’s the way it is this second day of the new year.
    Happy New Year to CE and all it’s very sensible, spiritual and non-progressive contributors.

  • plowshare

    Obama got it right this time. Let’s hope he moderates his stance on abortion.

  • SeanReynoldsNZ

    You Americans complain troo much about gas prices.

    During 2008, the price of fuel in New Zealand peaked at NZ$2.20 per litre, which with an exchange rate of NZ$1.00 = US$0.75 at the time worked out at US$6.27 per gallon. For me to fill up my 1995 Nissan Pulsar 3-door hatchback with an average fill of 42 litres, this would cost me NZ$92.40, or about 13% of my weekly net income of $692. By the way, I was on the rich side of earnings compared to most households in New Zealand. The average Kiwi Household earns more like NZ$40,000 per annum, or NZ$32,000 per annum after tax. With the price of petrol in NZ sitting now at NZ$1.30 per litre, it would cost more like NZ$54.60 to fill up the car. This still amounts to a lot for a lot of NZers.

    My point is, your petrol is cheap. Ours is expensive!

    Little wonder then that I moved to Australia, like about 45,000 other NZers do every year. My income went up significantly, and it costs slightly less to live here.

  • kirbys

    If we don’t complain, then we get the outrageous gas taxes to which NZ and most Europeans are subjected! 🙂

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  • SeanReynoldsNZ

    Kia Ora Kirbys,

    Good point! For NZers, they get slammed in several ways.

    First of all, because the price of oil is in US dollars, the collapse of the value of the NZ dollar, which was strong against the US dollar due to NZ having the highest interest rates in the OECD, meant that oil got more expensive in NZ dollars.

    Second, about 50% of what you pay at the pump is excise duty,

    Third, you pay tax on tax in New Zealand as GST is charged on the price of petrol, including the excise tax part.

    Unfortunately a similar scenario happens here in Australia, although the price does vary depending on which state you are in. Here in New South Wales (The state with Sydney as the capital), the State Government charges additional fuel taxes to the Commonwealth Government, whereas in Queensland (State capital being Brisbane), the State Government subsidises the Commonwealth Governments petrol tax, leading to a significant reduction in price at the pump.

    Of course, I don’t mind paying taxes for legitimate uses such as building new transport infrastructure (including road and rail – as a road user I benefit from a public transport system that clears the roads of trucks and cars), but not for election bribes, carbon credits, or other dodgy scams.