Some Money With Your CAFE

I'm with Beutler and DeLong that raising CAFE standards would be better than not raising CAFE standards because it would be better to have higher gas taxes, and then not having higher gas taxes either because it's too unpopular, but I don't think CAFE fans should go as far as Brian does in obscuring CAFE's limits as a policy option. It's true that driving habits aren't incredibly responsive to short-term changes in the price of gas, but they're not completely inelastic and their may well be more long-term sensitivity.

CAFE, meanwhile, relies entirely on the fuel efficiency lever as a means of reducing gasoline consumption even though the total amount of driving is clearly an important determinant of how much gas gets used.

Most of all, though, gasoline taxes, apart from their impact on carbon emissions (and emissions of other things), raise revenue which is useful in a number of ways. I feel like something green types tend to overlook when citing political feasibility as the reason for preferring certain kinds of regulatory measures to tax-oriented ones is that from the point of view of progressive politics more broadly the politically difficult task of raising taxes just can't be postponed forever. Raising the gasoline tax would be politically difficult. But so would instituting a VAT. And so would an across the board income tax rate increase. And so would everything else. Just getting the Bush tax cuts to expire will be a non-trivially difficult task, but implementing progressive priorities on health care, education, etc. will require even more revenue than their cancellation would raise.

It seems to me that there's a case to be made for going bigger -- for taking on a task that, while more politically difficult, also helps a broader coalition of people accomplish their goals.

(NB: needless to say, higher gas taxes and tighter CAFE standards aren't mutually exclusive policy options)

Comments

Big Tobacco Matt. Can't be reducing the consumption of something that brings in a lot of tax revenue.

Posted by steve duncan | October 10, 2007 3:34 PM

the politically difficult task of raising taxes just can't be postponed forever . . . implementing progressive priorities on health care, education, etc. will require even more revenue than their cancellation would raise.

I dunno. When did liberals have to start being the only fiscally responsible people in town? Why must progressive priorities be funded when conservative priorities (the massive security apparatus and endless war) do not? Liberals fall into a conservative trap when they accept this reasoning without question. If $190 billion in war costs can be funded with debt, than so can $190 billion in social policy. Democrats need to stop talking about raising taxes. Let someone else be the responsible ones who wear that albatross for a while.

People don't want responsible government. They might say they do, but time and again they'll reward the guy who says they can have their cake and eat it too.

Posted by Rob Mac | October 10, 2007 3:52 PM

Why not raise revenue by increasing the tax on cigarettes for those individuals who drive low-mileage vehicles? That way the bad people, cigarette smokers, will get what they deserve.

Having smokers pay for increased SCHIP is only a first step towards an equitable redistribution program. Smokers should pay more. Until it hurts. And then they should be taxed even more.

Posted by Quiddity | October 10, 2007 4:01 PM

Have you really thought about the impact this would have on people outside the city core who have no choice but to drive to work? We're already hurting from high gas prices, and would change our lifestyles if we could, but the housing market sucks (making it hard to move), new cars are expensive, and there are few if any mass transit options in big chunks of the country.

Instead of advocating for policies that will make our lives harder, why not work on giving us better choices?

Posted by Mike | October 10, 2007 4:01 PM

If driving habits are responsive to the cost of driving—which is what we're really talking about when we talk about the price of gas—isn't CAFE potentially counterproductive, as a less thirsty car is cheaper to drive?

Yes, a stiff fuel tax would be optimal.

But, if we're thinking about alternatives, we should focus on vehicle weight and performance, not fuel economy itself.

Above a certain weight (say 3500 lbs), there should be a stiff tax for drive-trains that provide better acceleration than 10 seconds to 60. (For comparison purposes, a 4-cylinder Toyota Camry gets there in 8.6 seconds).

If you need a big vehicle to haul or tow, you don't need to rocket from stop lights, so you'd happily take the untaxed rate of acceleration. You do need power to tow, but it would be trivial to put a chip that regulates acceleration. It would use all the same systems that provide stability and rollover control.

If you want a sportier car and wanted to escape the tax, you'd buy something relatively light. Lower the average weight of cars and you'd see significant fuel savings, more than any likely increase in the CAFE standard.

Would anyone want to buy big, fast trucks like a 400HP Cadillac Escalade? Not if you had to pay a big levy or get neutered performance. Overpowered trucks that are bigger than most people's needs would become much less attractive, likely offsetting the market distortion created by lower CAFE standards for light trucks.

Our national fuel consumption keeps going up because the average weight and power of vehicles keeps going up. Bring one or the other down and you'll reap all the efficiency gains that auto manufacturers have been making for years, but have been using to make cars bigger and faster.

Posted by Sean Roche | October 10, 2007 4:02 PM

Matt, I think you raise a good point about the relationship between fuel efficiency and driving habits. When people have better fuel efficiency, they drive more. So, to use a Clive Crook analogy, it wouldn't be less beer, but low-carb beer in a bigger glass.

And speaking of driving habits, do you know the proportion of Americans who drive SUV's and trucks? (I've done some work with AAM, and we have maps detailing driving preferences here: http://www.autochoice.org/) I bet it's over 50%.

So, I think we need to raise CAFE standards moderately. But to think that is the best solution is an incredibly archaic way of thinking (even if it is the most politically expedient).

Posted by Muskie | October 10, 2007 4:08 PM

Just getting the Bush tax cuts to expire will be a non-trivially difficult task

I've never understood this. What's so difficult about inaction?

To let the Bush tax cuts expire, all the Dems have to do is just not get around to passing legislation extending them.

Why do the Dems constantly buffalo themselves into the notion that they've got to DO SOMETHING when they don't? The GOP would never dream of returning the favor.

Posted by low-tech cyclist | October 10, 2007 4:30 PM

Re Sean Roche

Mr. Roches' suggestion points to an easily applied tax, namely a yearly tax on engine displacement. Such a tax would do two things. It would encourage smaller higher performance engines and it would also encourage hybrid cars. For instance, place a yearly tax of $100 on a 1.5 - 2.0 liter displacement, a tax of $200 on a 2.0 - 2.5 liter displacement, etc. It could even escalate with increasing engine displacement. I believe that such a tax is levied in Germany.

Posted by SLC | October 10, 2007 5:06 PM

You do realize, I hope, that since safety features have weight, and occupy space, and larger heavier vehicles inherently, all things being equal, have worse mileage, that there's an unavoidable tradeoff between vehicle mileage and vehicle safety? And, sure, application of high technology and exotic (read, "expensive") materials can shift that tradeoff, but they can't eliminate it.

IOW, I hope nobody who wants the CAFE standards boosted is in the habit of using the phrase "blood for oil", because CAFE is the original "blood for oil" trade.

On the other hand, since accidents go up with miles traveled, and so does fuel consumption, programs that try to save fuel by discouraging people from driving save both money AND lives.

Maybe the government ought to have an official policy of encouraging telecommuting...

Posted by Brett Bellmore | October 10, 2007 5:54 PM

Any policy which seeks to discourage transportation will be a political loser. Ease of transportation is a key to freedom. MattY suggests that we need to raise revenue through gas taxes as if driving were the negative issue rather than the pollution associated with automobiles. Any solution that results in less pollution while increasing freedom of movement that can be accomplished without any significant increase in taxes should be pursued vigorously by a political party that is serious about improving the environment.

Matt's next stroke of political genius will be to suggest that America turn down the heat and wear more hoodies this winter. Perhaps the government could stop subsidizing home heating oil and use that money to fund his public transportation improvements.

Posted by Just Karl | October 10, 2007 7:10 PM

Limit the size of gas tanks

I know this sounds like a screwball idea. It is a screwball idea. But I think it accurately reflects a genuine screwball aspect of human nature that could be exploited to decrease gas consumption.

People don't like to have to stop at gas stations. I was the first Prius owner in Savannah, GA, and therefore got into quite a few conversations with total strangers about the car. I was immediately struck by the fact that very few people were interested in fuel efficiency per se, or how great it was that someone could get 50 mpg with this car, and thus only have to spend half as much money on gas. But very many people, and especially people whom you would think would have to worry even more than me about costs, only wanted to know how many miles I could go between fill-ups, and were very jazzed at the prospect of only having to go the gas station half as often.

So, if you want to encourage low fuel consumption, but are afraid to raise the gas tax, simply combine stricter CAFE standards with a ratcheting down in the allowed size of gas tanks. At a 5-6 gallons max capacity for fuel tanks, folks will insist on low mileage vehicles, and will avoid driving them more miles, all in order to avoid having to stop more often at the gas station!

Posted by Glen Tomkins | October 10, 2007 11:18 PM

"To let the Bush tax cuts expire, all the Dems have to do is just not get around to passing legislation extending them."

Technically true, but there are elements of those tax cuts that are pretty popular among the middle class as well as the evil rich: the 15% rate on cap gains and dividends, dramatically expanded 401(k) and IRA contribution levels, etc. So Dems will want to keep most of that while socking the upper middle class with higher taxes. That will require action.

Posted by juan | October 11, 2007 2:08 AM

> Have you really thought about the impact this
> would have on people outside the city core who
> have no choice but to drive to work? We're already
> hurting from high gas prices, and would change
> our lifestyles if we could,

Yes, because as I drive through the exuburbs I see scrapyards full of Yukon Denalis and Hummer H3s, and parking lots (esp high school parking lots) full of Chevy Aveos, Honda Fits, and SmartCars.

I like personal transportation as much as the next guy, but I am 6'3" and I have been able to get all the personal transport my greedy heart desires in automobiles that average 42 mpg or better. Until we get honest with ourselves that the "free lifestyle" issue is either a blind for the penis substitution effect, or is at best equal to that effect, we are in a world of hurt.

Cranky

Posted by Cranky Observer | October 11, 2007 9:56 AM