A great idea from Larry Summers
Now that energy prices are down, Lawrence Summers argues that this is the right time for a carbon tax. In a Washington Post column (1/5/15), Summers explains that since consumers have received a windfall, “it would be possible to impose substantial carbon taxes without them being burdened relative to where things stood six months ago.”
This is brilliant. We can only hope that Democrats everywhere adopt the Summers plan. Mr. Summers was secretary of the treasury in Bill Clinton’s administration and head of the National Economic Council under President Obama. He has had a few other jobs in between – running Harvard, for one. A smart guy. Hillary, who is scratching around for reasons why she is running for president, should listen to this paragon, as should every other Democrat down the candidate chain.
In the distant past (1980), when oil prices shot up, President Jimmy Carter and the Democrats adopted a windfall profits tax on oil companies. That was repealed later under President Reagan.
With the drop in gas prices, Mr. Summers sees another windfall and another opportunity for a tax hike.
“Windfall” is an interesting word. It means an unexpected or sudden gain. It carries the implication that the gain is unearned.
Should we feel guilty about this windfall? Mr. Summers wants us to. He writes that it will lead to “energy overuse.” I am just happy that I can fill the tank of my Toyota for less money. But if prices go even lower, will I be able to resist “energy overuse”? Driving round and round in traffic on the Washington Beltway is so enticing.
Mr. Summers proposes that some of the proceeds from the tax increase be used on infrastructure. Pay more, so we drive less, so the government can spend more on roads. Okay, I know “infrastructure” means more than roads, but this was too delicious to pass up.
“Even if the government had no need or use for revenue,” Mr. Summers wrote, “it could make the economy function better by levying carbon taxes and rebating the money to taxpayers.” I confess I had a moment of doubt when I read that sentence. Pay more, fix the economy, get a rebate. Will there be a rebate card or a coupon we mail in? Is there an expiration date? What happens when gas prices go back up? Seems complicated, but what do I know?
As we huddle in our homes, counting the few extra dollars we now have to help cover expenses, thank goodness the defenders of the middle class are figuring out ways to make our lives better by raising gas prices. Hillary, call Larry. He’s on to something.