John Tierney's got it half right

The New York Times now charges for access to their top columnists. But you can look up the column on LexisNexis and get it for free and spread it around the internet on your blog -- NY Times, have your lawyers contact me at 717-337-6672.



In today's column, John Tierney proposes we raise gas taxes by 50 cents a gallon and plunk the proceeds into personal accounts to shore up Social Security. Here's the column:



I have a modest proposal to fight global warming, save energy, cut air pollution, ease traffic congestion, reduce highway fatalities and, while we're at it, reform Social Security.



All we have to do is raise the federal gasoline tax by 50 cents per gallon and refund all the new revenue directly to Americans by putting it in new Social Security individual accounts. I realize how crazy this sounds, given the current public anger at high gas prices, but bear with me.



The $3-per-gallon price probably isn't going to last. Suppose, as some experts do, that the price will end up sooner or later back around $2 per gallon. And suppose you gradually phase in the tax only when prices fall -- say, an extra dime of tax per gallon whenever the retail price falls by 20 cents. Consumers would still see their costs declining at the pump, so there'd be no sudden shock at any tax increase.



Some people would complain about any new tax, but at least they'd get their money back. Americans hate seeing today's gas taxes being diverted to thousands of pork-barrel projects like horse trails in Virginia and the bridge to nowhere in Alaska. These new tax revenues would be divided equally among all workers and go right into their personal accounts.



As much as Democrats hate private accounts, they couldn't complain that anyone was ''raiding'' the Social Security ''trust fund'' for these accounts. Recalcitrant Democrats would have to explain why they oppose an energy policy favored by environmentalists and a social program that would transfer money to the poor. Since low-income people tend to drive less than the average American, they pay less in gas taxes than average, so they'd make money when the revenue was divided equally.



Any new tax, of course, terrifies Republicans. When I mentioned this idea to one White House official, he went immediately into off-the-record mode and warned me, ''You realize you're never going to get invited to Grover's Wednesday meetings.'' Those are the weekly conservative strategy sessions convened by Grover Norquist, the head of Americans for Tax Reform and enforcer of the no-tax pledge signed by a majority of the members of the House.



But Norquist reassured me I would not be cast into the abyss. He said a 50-cent gas tax, with all the revenue refunded to personal accounts, wasn't verboten. ''If it were attached to one of the annual tax cuts that we've been passing so that the overall package reduced taxes, it wouldn't violate the no-tax pledge,'' he said.



Some conservatives I consulted, on and off Capitol Hill, were opposed to the new tax and didn't like taxing drivers to pay for retirement accounts. But others were intrigued by the prospect of offering Democrats something new in exchange for pension reform.



''If you used a gas tax as an end run to start personal accounts for people, you might strengthen their savings habits and get them to start contributing their own money,'' said Gary Becker, the Nobel laureate economist. He and other economists especially liked the notion of encouraging energy conservation through a gas tax instead of the current approach of mandating fuel-economy standards for cars.



A 50-cent tax would save much more gasoline and avoid some of the perverse effects of the fuel-economy rules, which encourage people to drive more because their new cars save them money on gas. A gas tax makes people drive less, not only saving gas but also easing congestion on the roads and reducing pollution.



Although 50 cents per gallon may seem high (slightly more than the total current federal and state taxes on gas), it's in line with the calculations of the economists Ian Parry and Kenneth Small. They figure that the tax should increase 60 cents per gallon to compensate for the congestion, pollution and other costs that drivers impose on society.



A 50-cent tax increase would reduce driving but still yield nearly $70 billion in extra revenue annually, according to Peter Van Doren, the editor of the journal Regulation at the Cato Institute. There would be enough to put about $440 into the personal account of every worker now paying into Social Security.



As those workers watched their nest eggs grow, they'd want to put more of their Social Security taxes into personal accounts instead of the mythical trust fund now being squandered by Congress. And then, after we've reformed Social Security while saving the planet, we could take on something really challenging.



If this is the first sign that conservatives are beginning to see the light on gasoline taxes, I'm overjoyed. I also note Grover Norquist's response to Tierney's plan: ''If it were attached to one of the annual tax cuts that we've been passing so that the overall package reduced taxes, it wouldn't violate the no-tax pledge.'' So maybe there's hope for the proposal for a progressive, "green" consumption tax that I wrote about a few months ago (I don't know how to link to it, but I posted it June 7 - it's in the archives).



Where I disagree with Tierney is on his continued obsession with personal accounts. First, the fundamental problem with personal accounts is that they destroy the insurance/redistributive aspect of Social Security. Social Security is not a retirement plan. It provides insurance against the untimely death of a parent or spouse and disability. It guarantees you a minimum level of income even if you didn't manage to save during your working years, or if you did save but lost your savings in a stock market crash, or did save but lived longer than you had planned for. It redistributes money from people who make a lot during their working years to people who don't. Personal accounts, on the other hand, tie your benefits strictly to your contributions.



Second, if you can "save Social Security" by imposing a new tax, the proceeds of which are dedicated to personal accounts, then you can just as easily save Social Security by imposing a new tax, the proceeds of which are dedicated to paying out traditional benefits. That's what liberals have been advocating for some time now; nice to see the conservatives are coming along, half way at least.