Sometimes I really want to hug the guy (Win, Win, Win, Win, Win ...):
That is why I believe the second biggest decision Barack Obama has to make — the first is deciding the size of the stimulus — is whether to increase the federal gasoline tax or impose an economy-wide carbon tax. Best I can tell, the Obama team has no intention of doing either at this time. I understand why. Raising taxes in a recession is a no-no. But I’ve wracked my brain trying to think of ways to retool America around clean-power technologies without a price signal — i.e., a tax — and there are no effective ones. (Toughening energy-effiency regulations alone won’t do it.) Without a higher gas tax or carbon tax, Obama will lack the leverage to drive critical pieces of his foreign and domestic agendas.
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Today’s financial crisis is Obama’s 9/11. The public is ready to be mobilized. Obama is coming in with enormous popularity. This is his best window of opportunity to impose a gas tax. And he could make it painless: offset the gas tax by lowering payroll taxes, or phase it in over two years at 10 cents a month. But if Obama, like Bush, wills the ends and not the means — wills a green economy without the price signals needed to change consumer behavior and drive innovation — he will fail.
One thing: in the middle paragraph Friedman seems to equate two ways of raising the price of gas: a price floor and a tax. Both policies would raise the price and reduce the amount of gasoline used but the price floor is an inferior policy for two reasons. The government receives no tax revenue with a price floor, when it needs revenue, and price floors create shortages. The second of these two differences is the thing we most want to avoid.
Also, both policies create a deadweight loss (i.e., inefficiency) but the loss is more than covered by avoidance of negative externalities.
But, another thing: the title of the piece is inaccurate (A gasoline tax “is not just win-win; it’s win, win, win, win, win,” says the Johns Hopkins author and foreign policy specialist Michael Mandelbaum.). There are no win-win policies. Any government policy creates benefits and costs, winners and losers. A gas tax generates benefits greater than the costs but there are still costs. Ignoring the costs simply makes passage of a gas tax more difficult.
My suggestion for a more accurate (although maybe not better) title? "Benefits much greater than costs."