Remember Larry Summers? You know.. the brilliant Harvard luminary who wound up being the President’s top economic advisor during his first term. Right, that guy. You might think he’s dropped off the face of the Earth since then, but he’s still keeping busy in the advisor business. And just now he’s got some advice for all of you. With gas prices hitting five year lows thanks to expanded domestic production, Mr. Summers is just sure that this is the perfect time to put a big old carbon tax on every fossil fuel product in the world.
While the recent decline in energy prices is a good thing in that it has, on balance, raised the incomes of Americans, it has also exacerbated the problem of energy overuse. The benefit of imposing carbon taxes is therefore enhanced.
But Larry… what about the low income people who are always the ones hit hardest by these lofty, idealistic plans which involve jacking up taxes on things that everyone uses? Not to worry. He’s got that covered. (Emphasis added)
On the other side of the ledger, there has always been the concern that a carbon tax would place an unfair burden on some middle- and low-income consumers. Those who drive long distances to work, say, or who have homes that are expensive to heat would be disproportionately burdened. Now that these consumers have received a windfall from the fall in energy prices, it would be possible to impose substantial carbon taxes without them being burdened relative to where things stood six months ago.
Did you notice what he did there? People were significantly changing their work schedules, opting for “staycations” and making sacrifices so they could heat their homes until we finally found a way to drive the prices down. But under Larry’s plan, we can make sure that life doesn’t suck any more than it did before! Everyone should be really excited about that sort of plan.
Here’s the one dirty little secret (which isn’t really a secret at all) that Larry Summers doesn’t want you to think too much about. The gas prices are low right now, it’s true. And if we manage to keep up with the technology and maintain focus on continued domestic production and energy independence, we might even keep the prices down for as much as another year or two. But this is not a permanent condition. Situations change, international politics intrudes, reserves run out… it’s an uncertain world. The prices for gas, home heating and all the rest will eventually go up again. But as we have found from trusting the federal government on other issues in the past, that carbon tax will be around forever once the door is opened up.
His alternate theory is a sort of “accordion tax” situation. This would put a flexible tax in place, the amount of which would be determined by some baseline “high” price. That way, the lower the price of gas dropped, the more the tax would increase. How this is supposed to sound like a tempting alternative is a mystery. All it would produce is a case where the evening news can tell everyone that the price of oil is dropping, but that they won’t have any more money in their pockets after their bills are paid.
Can’t you feel the excitement?
Join the conversation as a VIP Member