12.17.2008

OBAMA SURROUNDED BY PIGOU CLUB MEMBERS

As Greg Mankiw's blog points out, President-elect Obama is surrounded by policy advisors who favor higher gas taxes, most notably NEC Director Larry Summers and the new energy secretary, Steven Chu. Here's the money quote from Chu in the WSJ: "Somehow we have to figure out how to boost the price of gasoline to the levels in Europe."

And Obama's response? "But Mr. Obama has dismissed the idea of boosting the federal gasoline tax, a move energy experts say could be the single most effective step to promote alternative energies and temper demand. Mr. Obama said Sunday that a heightened gas tax would be a 'mistake' because it would put 'additional burdens on American families right now.'"

Except that because of the huge negative externalities associated with gasoline consumption, the real burden of too-cheap gas is being borne by all of society and by our children and their children, in the form of depleted infrastructure, scarcer natural resources in the hands of volatile dictators, and a burnt-out environment. So by "mistake," Obama really means, "death blow to my 2012 re-election chances." Is this change we can believe in?
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