Errors and Omissions

Reaction to Feldstein's TGR proposal

Feldstein's Harvard colleague Greg Mankiw is skeptical of the proposal, criticizing the bureaucracy it involves (see entire post here: Greg Mankiw's Blog: Feldstein on Gasoline).

Mankiw says, "As I am sure Marty would agree, this system is functionally equivalent to an increase in the gasoline tax, with the tax revenue rebated lump-sum to the public. I have said many times that I like the idea of higher gasoline taxes, but Marty's scheme leaves me cold. Do we need to create a new administrative bureaucracy because politicians are afraid to use the word tax?"

I think Mankiw misses an essential point here. This isn't a gas tax in sheep's clothing. "Rebated lump-sum to the public" is the operative phrase. A gas tax that gets dumped into the federal Treasury is bound be far more wasteful of the taxpayer's money than the administrative bureaucracy Feldstein's proposal would require.

Remember, a government surplus that took nearly ten years to create was utterly blown in a couple of years (by a supposedly fiscally-conservative government).

TGR creates the incentive to conserve without topping up the government spending trough to fund more bridges to nowhere.

Feldstein, oil, economics, TGR

posted by Unknown @ 6/05/2006 01:45:00 PM