Gas tax could alleviate U.S. debt

By the end of today, millions of Americans will have filed their
taxes, and most of them will not be paying much more than they have
in the last few years. The tax cuts of the Bush administration make
this tax season relatively pleasant, especially for people with
high incomes.

But at the same time, the nation is choking under a huge debt.
If politicians keep being complacent about taxes, today’s
college students will be among the ones to suffer the most from
this financial imbalance.

The United States has a record-setting deficit of $665.9 billion
in the books for 2004. Already, economic forecasters are warning
that this figure could increase by another $100 billion in 2005.
Due to this, nobody is even thinking about reducing the public
debt, which is currently at around $7.8 trillion.

The reason for this growing hole in the government’s
pocket is that taxpayers aren’t willing to finance their
government in a responsible way.

With Bush’s re-election, voters have given him the
thumbs-up for huge spending on homeland security and the U.S.-led
war on terrorism. Since his re-election, Bush has raised defense
spending by more than a third.

In a shrewd move, though, President Bush has not presented the
full bill for his lavish defense policies to the American public
yet. If the people had to pay higher taxes for the wars of past
years, I highly doubt that as many would have supported this
war.

But for now the government is on a spending spree, and the
people think they won’t have to pay for it. Heck, many even
have to pay fewer taxes!

Sometime soon, though, this is going to haunt taxpayers.

I talked to Professor Edward Leamer, director of the UCLA
Anderson Forecast. Leamer’s job is to make predictions about
economic developments, and at the moment Leamer is worried about
the government’s fiscal policies.

“You don’t get a tax cut without a spending
cut,” Leamer said. “What you get is a tax postponement.
The Bush administration gave us some massive tax
postponements.”

So for how long can the necessary tax hikes be postponed? Leamer
predicts that without any reforms, the problems will become
pressing in only three or four years. President Bush probably
doesn’t worry too much about that because he’ll be out
of office by then.

The next administration will face the financial mess he’s
left.

Then the biggest lump of the financial crisis will probably hit
home later than that. When the generation of baby boomers retires,
starting in about 10 years, the cost of the big social programs
““ Social Security, Medicare and Medicaid ““ will
skyrocket. And guess who will be paying the taxes then? You.

The current lawmakers are heaping a huge financial burden on the
shoulders of our generation. Leamer calls this process a
“generational transfer.” And the sad part is that our
generation isn’t aware of it ““ or maybe doesn’t
want to know the truth.

“We have this generational transfer happening without the
donor generation being aware of it,” Leamer said.

So what could be done right now to start tackling the soaring
debt and the exploding deficit? My proposal is this: Charge a $1
federal tax for every gallon of gas.

There, now it’s out. But let me explain myself.

First of all, gas prices in the United States are actually
ridiculously low compared to other countries. (In my home country
of Germany, I dole out around 60 bucks to fill up my tank.) This
tax could help soothe the deficits and it would hurt people just
enough to stir up some debate about the federal spending.

When I asked Leamer about this, he instantly voiced his support.
“That would be great,” he said. “A gas tax would
alleviate congestion, it would reduce our dependence on Middle East
crude oil, and it would also help to cure the deficits.”

Unfortunately, now that the gas prices are inching toward record
highs, a motion like this would be hugely unpopular. Last week,
California Democrats even proposed to lower the state tax on gas by
11 cents a gallon, just to bring some temporary relief to drivers.
On the other end of the political spectrum, the Republicans are
eager to drill into the cold Alaskan tundra for some drops of the
black gold.

But it’s hard to believe how shortsighted these actions
are. Americans should instead try to lower their dependence on
crude oil before this finite resource runs out.

Of course, a gas tax can only be a first step toward more
responsible taxation. In my opinion, the recent tax cuts need to be
discontinued and income taxes will need to be raised soon. If the
people feel the weight of the public deficit on their own
shoulders, they will start to hold their government accountable for
its spending.

The American public ““ and especially our generation
““ can keep ignoring the problem and borrowing money from
abroad to finance their mild taxation.

Just don’t say I didn’t warn you when you have to
mail in your whole paycheck on April 15, 2040.

Starre is a third-year study-abroad student from Germany.
Contribute to his gas fund by e-mailing him at
astarre@media.ucla.edu.

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