All the recent discussion on “stimulus” recently has made for a disastrous degradation in common sense and rational economic theory.
First, it is a myth that government can spend money and spur the economy. This myth is based on Keynesian economics, and more specifically, the Keynesian multiplier. This states that for every dollar the government spends, it has a positive effect worth 1.5 times the initial investment. Simply put, if this were true, why don’t we spend a few more trillion and we’ll be set for life? This is where the argument falters.
Next, increased fuel standards for vehicles are going to be made mandatory if President Obama gets his way. All cars and trucks made in the year 2020 will need to get 35 mpg, or else. This after the the auto industry has one if its worst years in recent history. Now it must shoulder the cost of reengineering its cars and trucks to meet a government imposed standard. I could understand if Putin, Castro, or Chavez made such an order, but we are supposed to live in the United States and shielded from anything remotely close to a planned economy, right?
Finally, the democrat controlled Ohio state government has made clear its intentions to consider a mileage tax. It seems, Ohioans have cut back on their fuel consumption and government revenue from gas taxes is sinking. In order to make up for the lost revenue, they are considering placing a gps device on EVERY vehicle that tracks the mileage and accrues a tax that one pays while at the pump (after your gps device beams the data to the receiver on the pump). I am sure this scheme will bring in LOTS of money, but it will cost Ohioans real dollars. The implementation costs alone are staggering, hundreds of millions of dollars. Not to mention the technological hurdles and equipment upkeep that must be taken into consideration. I thought reducing our fuel consumption was something the government wanted us to do?
Why is it that when a government revenue generating vehicle like the gas tax doesn’t bring in as much revenue we must find a way to replace it with another, government revenue generation vehicle? When there is a retail boom, is there ever a consideration to reduce the sales tax because it brings in more than expected revenues? The answer is no. The government simply finds more ways to spend it.
