Gassing the Economy

One of our favorite, behind-the-scenes neo-cons, Charles Krauthammer, is hard at work again. He plans to "stimulate" the economy and "push" us towards alternative fuels for our vehicles. How? Taxes, of course. Government has two answers to every problem and both of them involve a gun pointed at your head.

Here's how his scheme works, in his own words:

The simultaneous enactment of two measures: A $1 increase in the federal gasoline tax–together with an immediate $14 a week reduction of the FICA tax. Indeed, that reduction in payroll tax should go into effect the preceding week, so that the upside of the swap (the cash from the payroll tax rebate) is in hand even before the downside (the tax) kicks in.

The math is simple. The average American buys roughly 14 gallons of gasoline a week. The $1 gas tax takes $14 out of his pocket. The reduction in payroll tax puts it right back. The average driver comes out even, and the government makes nothing on the transaction. (There are, of course, more drivers than workers–203 million vs. 163 million. The 10 million unemployed would receive the extra $14 in their unemployment insurance checks. And the elderly who drive–there are 30 million licensed drivers over 65–would receive it with their Social Security payments.)

Revenue neutrality is essential. No money is taken out of the economy. Washington doesn’t get fatter. Nor does it get leaner. It is simply a transfer agent moving money from one activity (gasoline purchasing) to another (employment) with zero net revenue for the government.

GENIUS! So, by taxing us on something we have to use (gasoline) and cutting back on something we supposedly need (FICA, which is Social Security and Medicare), he plans to save us from ourselves and evil gasoline.

Hmm...

I have an idea: cut the FICA tax (or eliminate it) AND the federal fuel tax (for all fuels) and watch the economy suddenly begin to skyrocket as these burdens are lifted and trucking and transportation immediately begin showing larger profits and therefore hiring more people and lowering the cost of transporting goods. That would mean lower costs for us at the store PLUS an immediate boost to our own incomes (no more FICA tax, no more gasoline tax to get to work and so forth).

Meanwhile, since alternative energies have their own market and are growing at a rate that matches that market, cars that run on alternative fuels will become more and more popular in their own due time. Cities and towns will pass localized smog rules that benefit their population and the federal blanket laws that generally just muck up the works will disappear.

In this dream world, the federal government would become what it's meant to be: a small player in D.C. that occupies itself with national defense and foreign affairs. The states, counties, and cities of ths nation would once again practice localized law-making that citizens (who are directly affected by it) can more easily control.

Wow! What a concept!

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