I'll leave health care until tomorrow but the other concerns of our nation can be dealth with a single policy proposal that I call a houseboat with wheels because it can do more than one thing. Here are the objectives:
1. Increase fuel efficiency of cars in order to reduce our economy's dependence on fossil fuels and to reduce carbon emmissions.
2. Overfund social security so that we don't need to raise income taxes significantly in the future when we will have far fewer workers for each beneficiary.
3. Invest in US infrastructure, such as electrical transmission, renewable energy generation, mass transit, high speed rail.
All these things can be done with one new thing. We have a rare political consensus now that we need dramatic change in the way the US economy has been moving. Here's what we should do:
1. Impose a tax on gasoline consumption. The federal excise is low now, about 20 cents a gallon. I would like to see it increased gradually over the course of the next 15 years. Say 10 cents in 2010, 20 cents in 2011, etc. through 2024. This would give the auto industry some time to create more fuel efficient cars. The policy would be good for them because it would encourage people to replace their old inefficient cars.
2. Take the proceeds of the tax and put them into the social security trust fund.
3. Do not buy US treasury bonds with the proceeds. The point of the trust fund is to fund the certain increase in social security costs over a longer time period, by starting now. Using the fund to buy US treasuries just delays the tax consequences, undermining it's raison d'etre.
4. Instead buy municipal bonds with the proceeds. Direct muni purchases to new, clean, sustainable infrastructure projects, such as renewable energy, electric transmission, trains.
5. Structure the muni securities to pay debt service when we need it for social security, 2030 - 2050.
1 day ago