Raise the sales tax on gasoline. But do it in a smart way.
Even I'm surprised to hear myself propose this, because I probably drive as much as anyone who thinks of public transportation as nothing more than a good way to catch the flu.
But I have a suggestion now that gas has fallen by $1.57 a gallon since early 2014, and drivers are so thrilled that US consumer sentiment soared last month: Allow Washington to benefit from any further price drop so our lawmakers have no incentive to allow speculators to drive up gas again.
Here are some facts: gas is averaging $2.14 a gallon across the US. Already included in that price is 18.4 cents in federal tax and average state taxes of 22.7 cents. So around 41 cents of that $2.14 average price goes to the feds and states.
Unless Wall Street gets its greedy hands on gas again, the price should continue to decline. In the US alone, consumers guzzle 7 percent less gas than they did in 2007.
And with the US economy growing only moderately and much of the rest of the world growing not at all, the situation is bleak for those rooting for higher gas and oil prices. Even chaos in the oil-rich Middle East regions hasn't translated into a jump in prices.
Pick a target below which the federal government gets to share in the benefits of lower gasoline prices.
Let's pick $2 a gallon for argument's sake.
When the average US gas price drops below $2 — as it has in parts of New Jersey — then the federal tax will be increased by 1 cent a gallon for every 2 cents' drop in the price. In other words, the feds will be playing the game of a penny for us, a penny for drivers with savings under two bucks.
This will finally put Washington on the same side as the consumer when Wall Street comes crying that the drop in oil prices is a bad thing — even if it helps everyone except the oil companies and those who foolishly placed bets on oil's rise.
Under my idea, Washington has a strong incentive to keep the price of gas down. If the gas tax is raised — as many are proposing — without the sort of mechanism I'm suggesting, then the additional tax will stay in place even if prices go back up.
But any extra tax money received by the states or Washington under my scheme needs to be spent in a honorable, dedicated way. Fixing our bridges, tunnels and roadways, — many of which would embarrass a Third World country — would be a sensible use for this extra revenue.
Helping veterans would be another. Why vets? First, because it's the right thing to do. But also because many of them had to serve in a part of the world we wouldn't have cared about if it weren't for our country's love of gasoline.
As I said in my "oy vey!" column on Dec. 18, the Census Department was screwing up its reports on retail sales as well.
Census reported a monster 0.7 percent gain in retail sales for November compared with the previous month, even as stores were experiencing lackluster business. I said it was too good to be true because Census was mostly guessing at sales in most major categories.
And the November results weren't true. Last week Census not only revised November's gains down to 0.5 percent, but it also reported that retail sales in December declined 0.9 percent. December's results were the worst in 11 months.
Put the November revision together with the December decline, and sales dropped a total of 1.1 percent.
"Experts" quickly dismissed the December sales figures as flukes, blips and aberrations. Tell that to the retailers that are now closing stores by the bunches.
Consumers may have more gas money in their pockets, but so far they aren't using it to buy other things.
And why are bad numbers always aberrations, while good economic results are never questioned?
Self-deception is an evil in a free market economy.
Explain this to me.
The Federal Reserve recently sent a record $98.7 billion to the US Treasury. That's what the Fed does when it makes money on its bond portfolio. And that was the amount turned over for 2014.
But those profits come mostly from the bonds purchased through quantitative easing. QE, you might remember, is the program by which the central bank prints trillions in extra digital dollars so it can purchase government bonds in a shill operation that has keep interest rates abnormally low.
The Fed's bond portfolio is now around $4.5 billion, pumped up by the QE money that must eventually be made to disappear.
Those record low interest rates created by QE, as I've been saying for years and as many others are now repeating, is a stealth tax on savers who have been forced to forgo income so the Fed, banks and others can benefit from lower borrowing costs.
So, basically, that $98.7 billion is savers' money being diverted to the Treasury through the Fed.
If the QE money is, essentially, nothing more than ephemeral dough that will disappear one day, how can the Fed and Treasury be treating the $98.7 billion in QE profits as if it were real?
And why don't the media call the government to task for what is nothing more than a dangerous accounting trick?
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