Raise the Gas Tax; A Revenue-Neutral Way to Treat Our Oil Addiction

Reality is stark: Nearly every major foreign policy challenge weface is aggravated by our continued addiction to oil. Recentdevelopments in Europe, the Middle East and Africa only underscorethis fact. But a new president and changed economic conditions offerthe chance to take a bold step toward freeing our nation from thegrip of foreign petroleum.

In March 2006, I characterized America's excessive reliance onoil as "the albatross of national security." When oil prices soaredto a peak of nearly $150 a barrel last summer, oil riches emboldenedauthoritarian rulers from Venezuela to Iran to the genocidal regimein Sudan. Poor countries struggling to grow were crushed by theweight of oil import expenses. Allies in Europe have gone cold thiswinter as Russia wielded its near-monopoly on gas supplies as apolitical weapon. And our own economic woes were exacerbated as weshipped billions of dollars overseas to pay our oil bills.

Yet the huge external costs of our oil addiction -- in terms ofnational security, economic vulnerability and environmental damage -- are not accounted for in the price Americans pay at the pump.Classic economics identifies two basic options to intercede whereAdam Smith's invisible hand fails: Governments can regulate toforce, or prevent, certain actions. The government also can imposetargeted taxes, which are almost always the most efficient, leastinvasive and most transparent remedy for market failure.

In the Jan. 5 edition of the Weekly Standard, conservative writer(and Post columnist) Charles Krauthammer made a strong case for a"net-zero gas tax" proposal that would match, dollar for dollar, anincrease in the federal gas tax with a decrease in payroll tax,which is paid by every working American. Because it represents nonet tax hike, it would bring the benefits of reduced consumptionwhile putting money into the hands of Americans.

A gasoline tax is transparent, easy to administer and targeted atthe one sector that burns most of our oil. We know it would cutimports. When gasoline prices topped $4 a gallon last year,Americans chose to use less, leading to a major drop in gasolineconsumption. The gains from accurately priced gasoline would grow asAmericans demanded more fuel-efficient vehicles, chose non-petroleum alternatives to power them and found public transitoptions that work. Pricing gasoline to reflect its true cost to thenation would help spur a vast market in which oil alternatives suchas advanced biofuels would become competitive and innovation wouldflourish.

The auto industry would benefit from knowing that it could investaggressively in high-mileage technology without worrying thatconsumers might turn back to inefficient gas guzzlers. We would cutour greenhouse gas emissions, 30 percent of which come fromtransportation. Adjusting Americans' tax burden to put more spendingpower into their own hands makes sense when household budgets aresqueezed. A revenue-neutral oil security tax would take every pennycollected at the pump and put it right back into the pockets ofconsumers.

Options for doing so include cutting the payroll tax, whichdisproportionately affects the lowest-paid employees, so workerswould see extra money every payday. Alternatively, the governmentcould regularly send a check to everyone over 18. I am prepared towork with the Obama administration and colleagues in Congress todevise the most efficient way to return the revenue to the Americanpeople, even as we advocate the general policy of a gas tax topromote better cars and alternative fuels.

Americans sent nearly $430 billion to other countries in 2008 forthe cost of imported oil -- an amount equal to almost half ofPresident Obama's stimulus package. Those hundreds of billionsshould be spent to build a new energy economy here, not shipped todangerous regimes overseas.

No tax is perfect, and some special provisions may be necessaryfor individuals and groups disproportionately affected. But we as anation are already suffering every day from our oil dependence, anddecisive measures are needed. The alternative to a net-zero gas taxis ever-greater regulation, with more bureaucracy and the inevitabletemptations for lobbyists to exploit regulatory loopholes.Krauthammer's net-zero gas tax proposal identifies common ground forfiscal conservatives, security hawks, environmentalists andAmerica's lowest-paid workers. New York Times columnist ThomasFriedman has argued for similar steps. Whether it is a $1-a-gallontax or some greater amount commensurate with the true cost of oil, anet-zero gas tax is the type of transformational policy that wecould implement quickly and that would have immediate impact.

One of the simplest and most effective means available forstrengthening U.S. national security is to dramatically reduce ouroil dependence. A gas tax that returns money to Americans would takeus a long way toward that goal.

The writer, a member of the Senate Foreign Relations Committee,is a Republican from Indiana.

Raise the Gas Tax; A Revenue-Neutral Way to Treat Our Oil Addiction

Reality is stark: Nearly every major foreign policy challenge weface is aggravated by our continued addiction to oil. Recentdevelopments in Europe, the Middle East and Africa only underscorethis fact. But a new president and changed economic conditions offerthe chance to take a bold step toward freeing our nation from thegrip of foreign petroleum.

In March 2006, I characterized America's excessive reliance onoil as "the albatross of national security." When oil prices soaredto a peak of nearly $150 a barrel last summer, oil riches emboldenedauthoritarian rulers from Venezuela to Iran to the genocidal regimein Sudan. Poor countries struggling to grow were crushed by theweight of oil import expenses. Allies in Europe have gone cold thiswinter as Russia wielded its near-monopoly on gas supplies as apolitical weapon. And our own economic woes were exacerbated as weshipped billions of dollars overseas to pay our oil bills.

Yet the huge external costs of our oil addiction -- in terms ofnational security, economic vulnerability and environmental damage -- are not accounted for in the price Americans pay at the pump.Classic economics identifies two basic options to intercede whereAdam Smith's invisible hand fails: Governments can regulate toforce, or prevent, certain actions. The government also can imposetargeted taxes, which are almost always the most efficient, leastinvasive and most transparent remedy for market failure.

In the Jan. 5 edition of the Weekly Standard, conservative writer(and Post columnist) Charles Krauthammer made a strong case for a"net-zero gas tax" proposal that would match, dollar for dollar, anincrease in the federal gas tax with a decrease in payroll tax,which is paid by every working American. Because it represents nonet tax hike, it would bring the benefits of reduced consumptionwhile putting money into the hands of Americans.

A gasoline tax is transparent, easy to administer and targeted atthe one sector that burns most of our oil. We know it would cutimports. When gasoline prices topped $4 a gallon last year,Americans chose to use less, leading to a major drop in gasolineconsumption. The gains from accurately priced gasoline would grow asAmericans demanded more fuel-efficient vehicles, chose non-petroleum alternatives to power them and found public transitoptions that work. Pricing gasoline to reflect its true cost to thenation would help spur a vast market in which oil alternatives suchas advanced biofuels would become competitive and innovation wouldflourish.

The auto industry would benefit from knowing that it could investaggressively in high-mileage technology without worrying thatconsumers might turn back to inefficient gas guzzlers. We would cutour greenhouse gas emissions, 30 percent of which come fromtransportation. Adjusting Americans' tax burden to put more spendingpower into their own hands makes sense when household budgets aresqueezed. A revenue-neutral oil security tax would take every pennycollected at the pump and put it right back into the pockets ofconsumers.

Options for doing so include cutting the payroll tax, whichdisproportionately affects the lowest-paid employees, so workerswould see extra money every payday. Alternatively, the governmentcould regularly send a check to everyone over 18. I am prepared towork with the Obama administration and colleagues in Congress todevise the most efficient way to return the revenue to the Americanpeople, even as we advocate the general policy of a gas tax topromote better cars and alternative fuels.

Americans sent nearly $430 billion to other countries in 2008 forthe cost of imported oil -- an amount equal to almost half ofPresident Obama's stimulus package. Those hundreds of billionsshould be spent to build a new energy economy here, not shipped todangerous regimes overseas.

No tax is perfect, and some special provisions may be necessaryfor individuals and groups disproportionately affected. But we as anation are already suffering every day from our oil dependence, anddecisive measures are needed. The alternative to a net-zero gas taxis ever-greater regulation, with more bureaucracy and the inevitabletemptations for lobbyists to exploit regulatory loopholes.Krauthammer's net-zero gas tax proposal identifies common ground forfiscal conservatives, security hawks, environmentalists andAmerica's lowest-paid workers. New York Times columnist ThomasFriedman has argued for similar steps. Whether it is a $1-a-gallontax or some greater amount commensurate with the true cost of oil, anet-zero gas tax is the type of transformational policy that wecould implement quickly and that would have immediate impact.

One of the simplest and most effective means available forstrengthening U.S. national security is to dramatically reduce ouroil dependence. A gas tax that returns money to Americans would takeus a long way toward that goal.

The writer, a member of the Senate Foreign Relations Committee,is a Republican from Indiana.

Raise the Gas Tax; A Revenue-Neutral Way to Treat Our Oil Addiction

Reality is stark: Nearly every major foreign policy challenge weface is aggravated by our continued addiction to oil. Recentdevelopments in Europe, the Middle East and Africa only underscorethis fact. But a new president and changed economic conditions offerthe chance to take a bold step toward freeing our nation from thegrip of foreign petroleum.

In March 2006, I characterized America's excessive reliance onoil as "the albatross of national security." When oil prices soaredto a peak of nearly $150 a barrel last summer, oil riches emboldenedauthoritarian rulers from Venezuela to Iran to the genocidal regimein Sudan. Poor countries struggling to grow were crushed by theweight of oil import expenses. Allies in Europe have gone cold thiswinter as Russia wielded its near-monopoly on gas supplies as apolitical weapon. And our own economic woes were exacerbated as weshipped billions of dollars overseas to pay our oil bills.

Yet the huge external costs of our oil addiction -- in terms ofnational security, economic vulnerability and environmental damage -- are not accounted for in the price Americans pay at the pump.Classic economics identifies two basic options to intercede whereAdam Smith's invisible hand fails: Governments can regulate toforce, or prevent, certain actions. The government also can imposetargeted taxes, which are almost always the most efficient, leastinvasive and most transparent remedy for market failure.

In the Jan. 5 edition of the Weekly Standard, conservative writer(and Post columnist) Charles Krauthammer made a strong case for a"net-zero gas tax" proposal that would match, dollar for dollar, anincrease in the federal gas tax with a decrease in payroll tax,which is paid by every working American. Because it represents nonet tax hike, it would bring the benefits of reduced consumptionwhile putting money into the hands of Americans.

A gasoline tax is transparent, easy to administer and targeted atthe one sector that burns most of our oil. We know it would cutimports. When gasoline prices topped $4 a gallon last year,Americans chose to use less, leading to a major drop in gasolineconsumption. The gains from accurately priced gasoline would grow asAmericans demanded more fuel-efficient vehicles, chose non-petroleum alternatives to power them and found public transitoptions that work. Pricing gasoline to reflect its true cost to thenation would help spur a vast market in which oil alternatives suchas advanced biofuels would become competitive and innovation wouldflourish.

The auto industry would benefit from knowing that it could investaggressively in high-mileage technology without worrying thatconsumers might turn back to inefficient gas guzzlers. We would cutour greenhouse gas emissions, 30 percent of which come fromtransportation. Adjusting Americans' tax burden to put more spendingpower into their own hands makes sense when household budgets aresqueezed. A revenue-neutral oil security tax would take every pennycollected at the pump and put it right back into the pockets ofconsumers.

Options for doing so include cutting the payroll tax, whichdisproportionately affects the lowest-paid employees, so workerswould see extra money every payday. Alternatively, the governmentcould regularly send a check to everyone over 18. I am prepared towork with the Obama administration and colleagues in Congress todevise the most efficient way to return the revenue to the Americanpeople, even as we advocate the general policy of a gas tax topromote better cars and alternative fuels.

Americans sent nearly $430 billion to other countries in 2008 forthe cost of imported oil -- an amount equal to almost half ofPresident Obama's stimulus package. Those hundreds of billionsshould be spent to build a new energy economy here, not shipped todangerous regimes overseas.

No tax is perfect, and some special provisions may be necessaryfor individuals and groups disproportionately affected. But we as anation are already suffering every day from our oil dependence, anddecisive measures are needed. The alternative to a net-zero gas taxis ever-greater regulation, with more bureaucracy and the inevitabletemptations for lobbyists to exploit regulatory loopholes.Krauthammer's net-zero gas tax proposal identifies common ground forfiscal conservatives, security hawks, environmentalists andAmerica's lowest-paid workers. New York Times columnist ThomasFriedman has argued for similar steps. Whether it is a $1-a-gallontax or some greater amount commensurate with the true cost of oil, anet-zero gas tax is the type of transformational policy that wecould implement quickly and that would have immediate impact.

One of the simplest and most effective means available forstrengthening U.S. national security is to dramatically reduce ouroil dependence. A gas tax that returns money to Americans would takeus a long way toward that goal.

The writer, a member of the Senate Foreign Relations Committee,is a Republican from Indiana.