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Are Higher Gas Prices and Bankruptcy Just What Detroit Needs?

November 18th, 2008 . by economistmom

Maybe… according to Allan Sloan and Martin Feldstein, both writing in today’s Washington Post.  Can’t say I disagree with either of them, although I still want the government to do more to help out my friends and relatives who work for the industry (and are neither part of the unions nor among the highly-compensated executives, by the way).

My favorite part of Allan’s column (emphasis added):

This idea [for higher gasoline taxes] has been around for years and has gotten no traction. But it’s an idea whose time has come, given the stomach-churning ups and downs of gas prices, the visible folly of leaving our fate to oil-exporting countries and the speculators who helped drive prices irrationally high and may now be driving them irrationally low, and the fact that we’ll soon have a president who proposed targeted tax increases during the campaign and still got elected.

Yes, a big gas tax would cause economic hardship, especially to people who are barely making ends meet. But we could refund the money to those needy people through the income tax. We could also refund the gas tax to those of us who aren’t particularly needy or else use it for energy research-and-development or public works or – dare I say it — for deficit reduction.

Yeah, who on earth would ever suggest raising taxes for deficit reduction?

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