A Gas Tax Upon Your House (The Hidden Friedman)

In which our man Tom takes on the most powerful man in America--Dick Cheney--in his Wednesday column, No More Mr. Tough Guy (full colum accessible to Times Select subscribers):

I've always thought Dick Cheney took national security seriously. I don't anymore. It seems that Mr. Cheney is so convinced that we have no choice but to be dependent on crude oil, so convinced that conservation is just some silly liberal hobby, that he will never seriously summon the country to kick its oil habit, never summon it to do anything great.

Indeed, he seems determined to be a drag on any serious effort to make America energy-independent. He presents all this as a tough-guy "realist" view of the world. But it's actually an ignorant and naïve view — one that underestimates what Americans can do, and totally misses how the energy question has overtaken Iraq as the most important issue in U.S. foreign policy. If he persists, Mr. Cheney is going to ensure that the Bush team squanders its last three years — and a lot more years for the country.

Listen to Mr. Cheney's answer when the conservative talk show host Laura Ingraham asked him how he reacted to my urgings for a gasoline tax to push all Americans to drive energy-saving vehicles and make us energy-independent — now.

"Well, I don't agree with that," Mr. Cheney said. "I think — the president and I believe very deeply that, obviously, the government has got a role to play here in terms of supporting research into new technologies and encouraging the development of new methods of generating energy. ... But we also are big believers in the market, and that we need to be careful about having government come in, for example, and tell people how to live their lives. ... This notion that we have to 'impose pain,' some kind of government mandate, I think we would resist. The marketplace does work out there."

What is he talking about? The global oil market is anything but free. It's controlled by the world's largest cartel — OPEC — which sets output, and thereby prices, according to the needs of some of the worst regimes in the world. By doing nothing, we are letting their needs determine the price and their treasuries reap all the profits.

Take that, John Tierney.

Also, why does Mr. Cheney have no problem influencing the market by lowering taxes to get consumers to spend, but he rejects raising gasoline taxes to get consumers to save energy — a fundamental national interest.

Don't take it from me. Gregory Mankiw of Harvard, who recently retired as chairman of President Bush's Council of Economic Advisers, wrote in The Wall Street Journal on Jan. 3 about his New Year's resolutions: "Everyone hates taxes, but the government needs to fund its operations, and some taxes can actually do some good in the process. I will tell the American people that a higher tax on gasoline is better at encouraging conservation than are heavy-handed [mileage standards]. It would not only encourage people to buy more fuel-efficient cars, but it would encourage them to drive less."

It doesn't have to be one or the other. We can offer incentives to the car companies to market cars with better gas mileage that would save money on higher taxed gasoline (while providing some form of credit or tax breaks for those in lower income brackets to ease the regressiveness).

Finally, if Mr. Cheney believes so much in markets, why did the 2005 energy act contain about $2 billion in tax breaks for oil companies? Why does his administration permit a 54-cents-a-gallon tax on imported ethanol — fuel made from sugar or corn — so Brazilian sugar exports won't compete with American sugar? Yes, we tax imported ethanol from Brazil, but we don't tax imported oil from Saudi Arabia, Venezuela or Russia.