Saturday, August 7, 2010

The Eternal Short-Sightedness of Our Politicians

Retiring (thank goodness!) senator George Voinovich (R-Ohio) has a great idea,  "Let's raise the federal gas tax!"  What could go wrong?

Voinovich points out that receipts from the federal gas tax has been falling and therefore, the funding for projects supported by the gas tax have fallen as well.  Fair enough, but why have the receipts fallen?  Because unemployed people have little reason, or money, to purchase gas.  The immediate effect of raising the gas tax would be to make it more expensive for those of us who do still have jobs to get to work.  Further, by paying more at the pump, consumers are left with less money to purchase other goods and services.  This is before factoring in the rise in price for goods caused by increasing transportation costs associated with the increased tax.

Voinovich sells his idea as a "jobs creator".  Perhaps, but the lag time between when the gas taxes would kick in and when the infrastructure jobs (mainly union jobs, btw) kick in would have working people seeing their purchasing power crumble further with no noticeable benefit.  Where is the upside?

Better, get government out the way and create an environment where the private sector feels confident enough to expand and create more the jobs.  Once people get back to work the receipts from the federal gas tax will increase without the need for tax increases.

For our eternally short-sighted politicians the call to raise taxes is a reflexive answer to all problems.  More money is not the solution, growth is.  We need people in DC who understand this.

Cross posted at Potluck

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