“With the midterm election around the corner, here's a wacky idea you won't often hear from our elected leaders: We should raise the tax on gasoline. Not quickly, but substantially. I would like to see Congress increase the gas tax by $1 per gallon, phased in gradually by 10 cents per year over the next decade. Campaign consultants aren't fond of this kind of proposal, but policy wonks keep pushing for it. Here's why:
Comment: I don’t think Mankiw’s former boss would be willing to consider this idea, in spite of the fact that the President now realizes that Americans are “addicted” to oil.
An eighth reason for hiking the gas tax is that it would also have an important effect in reducing the trade deficit. We now import between almost seventy percent of the oil that we consume which adds to the current account deficit in a big way.
Extra Credit: Three hundred million Americans account for roughly five percent of the world’s population. What percentage of the world’s oil supply is currently consumed by Americans? Rather than e-mailing me the answer, post your answer and source directly to the blog under comments. If you are the first to post, and have not received extra credit in the past week, you will get the points.