Incompetence in the Name of Balance at CNN

Romney, as usual, is lying and engaging in demagoguery about the President:

Mitt Romney escalated Republican attacks on President Barack Obama's energy policies Sunday, calling for the firing or resignations of what he labeled the "gas hike trio" of top energy and environment officials in the administration.

The Republican presidential hopeful's remarks on "Fox News Sunday" illustrated a GOP strategy to target Obama for rising gas prices as part of a campaign narrative that depicts the president as stifling U.S. production in order to boost alternative energy sources....

"There's no question" that Obama is to blame for higher gas prices, Romney said on Fox, adding that the president wanted higher energy costs to help speed the transition from oil and other fossil fuels.

Why would Romney lie? As usual, the polls told him to lie:

Polls indicate Obama may be vulnerable on the issue, with his slowly rising approval rating in recent months appearing to stagnate or drop as gas prices have spiked.

Although President Obama presented a fact-based response,

Obama contends that oil prices are set by a global market and there is little that any administration can do in the short term to prevent recurring price spikes, like what is happening now.

Whether out of the pursuit of "false balance" - presenting facts from one side, lies from the other, refusing to pass judgment or provide objective context and pretending that constitutes neutral coverage - or out of sheer incompetence, you wouldn't know that from CNN's article.

It's not that CNN doesn't know that it can present factual corrections. They corrected Romney's relatively inconsequential error in the time line of the Keystone pipeline and Solyandra kerfuffles. But when he's outright lying, they're silent.

It's Time for $5 per Gallon Gas?

Three years ago, Thomas Friedman was observing how $4 per gallon tax influenced consumer behavior. There was truth in his observation - when gas prices passed $4 per gallon, many consumers had a hard time filling their gas tanks. We had people who literally had to choose between buying gas to get to work and making timely mortgage payments. Before you knew it, two of the "Big Three" U.S. auto manufacturers were in bankruptcy and the housing bubble burst. Ah, good times, good times.

Some of us see the return of $4+ gasoline as an inevitability have wondered what effect that will have on our largely jobless recovery from our post-housing bubble recession. It's easy to imagine gas pass $4 per gallon and having the nation plunge back into recession. To somebody like Friedman, who floats above the working world in his hybrid SUV, there are no such worries - his concern appears to be that $4 per gallon is too little.

The smart thing for us to do right now is to impose a $1-a-gallon gasoline tax, to be phased in at 5 cents a month beginning in 2012, with all the money going to pay down the deficit. Legislating a higher energy price today that takes effect in the future, notes the Princeton economist Alan Blinder, would trigger a shift in buying and investment well before the tax kicks in. With one little gasoline tax, we can make ourselves more economically and strategically secure, help sell more Chevy Volts and free ourselves to openly push for democratic values in the Middle East without worrying anymore that it will harm our oil interests. Yes, it will mean higher gas prices, but prices are going up anyway, folks. Let’s capture some it for ourselves.

I'm not sure how we would be capturing "some of" the windfall profits heading to the Middle East by having a $1 per gallon gas tax, but it's easy to see how such a tax, implemented now, would create incredible financial hardship in what, to Friedman, seems to be economic flyover country. I wish Friedman had linked to what Blinder actually wrote, so I would know if he's making an appeal to authority that isn't based upon what Blinder actually wrote, or if we're dealing with some sort of metaphorical case of the Blinder leading the blind. (And what happened to poor Michael Mandelbaum, his authority of days gone by?)

It's not that, were we to roll back the clock to the time when Friedman first proposed an incremental gas tax, it would be a bad thing. It's that there's such a thing as timing, and... let's face it, back when the economy was stronger he proposed (a smaller tax with) a larger vision:

I know it is a stretch - that the president announced tomorrow that he wanted an immediate 50-cents-a-gallon gasoline tax - the "American Renewal Tax," to be used to rebuild New Orleans, pay down the deficit, fund tax breaks for Americans to convert their cars to hybrid technology or biofuels, fund a Manhattan Project to develop alternatives for energy independence, and subsidize mass transit systems for our major cities.

Now it's just implement a regressive tax to "pay down the deficit"? I recognize that this idea has no political legs, which is perhaps why Friedman feels such liberty to keep raising it, but if we're working in the realm of fantasy why be so limited in imagining how the newly raised tax dollars will be spent?

Oil Prices

Matt Ygliesias paints a somewhat dismal picture of oil prices going up along with the economic recovery, perhaps resulting in another recession. That's quite possible. While the financial industry's misfeasance and malfeasance is at the heart of the global economic meltdown, the rapid escalation of gas prices appears to have triggered the collapse.

The funny thing is, we could make enormous strides with conservation. But as the world economy gears back up, we're going to be back to the situation of consistent annual growth in demand for oil, with new oil resources being more difficult and more expensive to tap. We really do seem to live in a world that will only respond to disaster, and even at that not very well... but one way or another we will be returning to a world where oil costs $100 or more per barrel, and where gas prices again hit $4 or more.

I doubt that the next generation will enjoy anywhere near the same level of mobility as this generation. Oh, sure, if you can afford it, the options will be there. But high fuel prices will price long road trips and air travel beyond the reach of many families who currently take cheap fuel for granted, and we already have a remarkable national amnesia about the months of $4/gallon gas.

Rethinking the Gas Tax.... Badly

Fred Hiatt suggests that gas taxes should be supplemented by, and probably ultimately replaced by, a tax based upon miles driven. This would entail installing a GPS device in every vehicle on the road, that would be tracked and monitored by tax authorities.

It would keep track of where you drove your car, and when, but the data would not be shared beyond the vehicle so privacy would be protected.

That's reassuring.

The current gas tax, as everybody knows, works like this: You buy gas, and a percentage of the purchase price goes to taxes. If you drive a more fuel efficient vehicle, you pay less per mile in taxes. If you do not, you pay more per mile. If the gas tax produces a revenue shortfall, it's possible to increase the tax. Now let's look at Hiatt's proposal:

Whereas 20 years ago user fees - gas taxes, tolls - covered as much as 75 percent of the wear and tear on roads and other direct costs, today the ratio is down to 60 percent, Atkinson says. People are being subsidized to drive - and that's before you even count the indirect costs of noise, traffic, wasted time and pollution.

So here, nothing that couldn't be addressed by a simple increase in the existing gas tax, rather than creating a parallel system of taxation.

It could be set to charge more per mile driven for Hummers than for Civics....

Something that happens by default under the present system, as Civics are vastly more fuel efficient than Hummers. So far, we're just adding technical and bureaucratic complexity to the current system. So what's this really about?

It could be set to charge ... more during rush hour than in the middle of the night; more for driving on congested bridges than on empty roads.

So what Hiatt is actually proposing is a congestion tax. He draws a parallel to another existing means of addressing road congestion - toll roads. He doesn't - and probably can't - explain why it's superior to add GPS tracking to every vehicle in the nation, and creating a new tax bill for every vehicle owner in the nation, rather than adding a few new toll roads in congested areas.

Here's where it gets ugly. Auto manufacturers, truck drivers and trucking companies, and similar groups lobby against higher gas taxes on inefficient vehicles; other groups, or maybe even the same auto manufacturers, will argue for tax holidays or subsidies for certain "fuel efficient vehicles". Cities lobby against suburbs, claiming a higher cost of road maintenance; suburbs lobby against cities, claiming that their taxpayers are being asked to subsidize urban roads. People who "have no choice" but to drive during rush hour or on congested roads will respond to peak pricing by protesting that they're being unfairly taxed, and perhaps also taxed beyond their means. And so it goes....

There are areas of this country that would benefit from some form of congestion pricing to discourage vehicle traffic, particularly during peak hours. There are even more areas of this country that could benefit from improved mass transportation so that people have a reasonable alternative to driving to work during rush hour. I think it would be better to address those issues directly, rather than creating the costly, cumbersome system Hiatt proposes.

Also, what are the chances that privacy protection would survive any sort of major public incident. What are the odds that concerns about driver privacy would have trumped the analysis of driving records to find the freeway snipers? To find out if suspects in the Unabomber case or anthrax mailings were in the vicinity of a post office where a mailing occurred? Does Hiatt believe that the agency holding the tracking information would reply, "Sorry, that's private"? (Even assuming that they would make that response, backed up by legislation, when confronted with a subpoena from somebody who was tracking suspected infidelity of a spouse in a divorce case.) Is this where we get the usual response - a shrug, and the declaration, "Well, I have nothing to hide"?

All You Need Is A Perfect Product!

After months of describing how the Big Three need to be forcibly reinvented, and required to build cars under government-imposed environmental and fuel efficiency standards that don't apply to their foreign competitors, Thomas Friedman has shifted course. Sort of.

Over the years, Detroit bosses kept repeating: “We have to make the cars people want.” That’s why they’re in trouble. Their job is to make the cars people don’t know they want but will buy like crazy when they see them. I would have been happy with my Sony Walkman had Apple not invented the iPod. Now I can’t live without my iPod. I didn’t know I wanted it, but Apple did. Same with my Toyota hybrid.

It says something about Friedman's candor that he writes "Toyota" instead of "Lexus", and "hybrid" instead of "SUV hybrid". There's a world of difference between Toyota's least fuel efficient hybrid and the Prius. Had Friedman wanted a roughly equivalent vehicle at a slightly lower price, with slightly greater fuel efficiency, he would have purchased a Highlander hybrid. Was he paying extra for the additional power of the Lexus, even at the expense of fuel efficiency? Real wood trim instead of plastic?

I have a Toyota hybrid. It's nice, it's quiet, it has very low emissions, it's... fuel efficient for a car with its feature set, but hardly the most fuel efficient vehicle on the market. Could I live without it, or easily substitute another vehicle for it? Sure. It's a car. I would love to hear Friedman explain why he can't live without his hybrid, rather than having him simply suggest that it rounds out his life like his... iPod. The fact is, Friedman can easily afford a luxury SUV. He can easily afford the gas that fills it, and could easily afford it at $4, $6, or $10/gallon. When he has argued for higher gas taxes to force consumers to buy vehicles like... his? He sounds a bit like a modern Marie Antoinette.

As for building the cars people want to buy, let's go back a year ago to Friedman's et tu, Toyota, after that company joined the Big Three in opposing more stringent CAFE standards.

Now why would Toyota, which has used the Prius to brand itself as the greenest car company, pull such a stunt? Is it because Toyota wants to slow down innovation in Detroit on more energy efficient vehicles, which Toyota already dominates, while also keeping mileage room to build giant pickup trucks, like the Toyota Tundra, at the gas-guzzler end of the U.S. market?

“Toyota wants to keep its green halo and beat G.M. in the big trucks, too,” said Deron Lovaas, vehicles expert at the Natural Resources Defense Council.

Friedman has consistently conflated two different questions - what vehicles consumers want, and how gas prices affect their choices. Remove gas prices from the equation and, as I quipped the other day, it appears that Americans want a vehicle the size of a small house that does 0-60 in less than 10 seconds and is available for a price between $20-$30K. Toyota's ability to produce vehicles that people want in an era of high gas prices comes, in no small part, from the fact that their domestic market has faced very high gas taxes, and thus very high gas prices, for many years. They, like the Big Three, also wanted to be able to take advantage of U.S. consumer preferences for large, low MPG vehicles.

When I was last shopping for cars, I really didn't see anything transformational. I saw a lot of sameness from one auto manufacturer to the next - domestic, European, Japanese, Korean.... Within the category of vehicles I was considering (and giant SUV's, trucks and Hummers weren't under consideration), my decision was made in part on fuel efficiency (a hybrid versus a non-hybrid model), but that was well behind issues of vehicle quality and expected longevity on my "wish list". My sentiment is apparently not atypical, and presumably is why Lexus offers Friedman's SUV in a better-selling non-hybrid model, and Toyota offers the Camry and Highlander in better-selling non-hybrid models.

But isn't that the rub? Friedman wants Detroit to develop a one-size-fits-all vehicle, popular with consumers regardless of gas prices, but also green and fuel-efficient. A wonderful concept, but something that nobody in the auto industry, including the most innovative, efficient, environmentally conscious manufacturers, believes exists. You want to force consumer choices in that direction? Go back to arguing for high gas taxes or setting floors on gas prices, such that consumers are compelled to buy the vehicles you want them to buy, but don't pretend that you're arguing for a context in which they will be able to buy the vehicles they want.

Argh, No!

Thomas Friedman again announces how the auto industry must design future products if it is to be rescued:

You want my tax dollars? Then I want to see the precise production plans and timetables for the hybridization of all your cars and trucks within 36 months. I want every bailed-out car company to move to hybrid electric drive trains, because nothing would both improve mileage and emissions more - and also stimulate a whole new 21st-century, job-creating industry: batteries.

Hybrids represent a tiny percentage of the domestic auto market, and represented a tiny percentage even when gas prices peaked. Hybrid technology is expensive. The cheaper, more efficient batteries Friedman wants? They're still vaporware - they don't exist. And there aren't factories lined up to manufacture millions of batteries for new hybrids - with the increased demand for the Prius this past year, Toyota had to disappoint prospective purchasers with long waits because the supply of batteries is limited.

If anything has been vindicated by the fall of the Big Three, it's Friedman's long-standing (and sometimes peculiar) call for higher gas taxes. What happened when gas prices hit $4/gallon? Friedman's dreams came true - the conspiracy between the Big 3 and Congress to carve enormous exceptions to CAFE standards collapsed, and the market for gas guzzling vehicles plummeted. That is to say, until Congress grows a backbone, the better approach to trying to change the vehicles that Americans buy is by hitting them in the pocketbook.

If Friedman's ideas are adopted, domestic autos may be modestly more fuel efficient than imports, but due to the cost of the hybrid technology it will cost about $2,000 more for a roughly equivalent car. People already have the choice of paying a premium for hybrid technology and, in overwhelming numbers, they're keeping that $2,000 in their pockets and buying more fuel efficient, conventionally powered vehicles.

Set an even floor. If it makes sense that every vehicle on the road be a hybrid (and, as the owner of a hybrid, in my opinion it does not make sense), then require that of every car manufacturer serving the U.S. market. Don't handicap the domestic manufacturers at a point in time when they're struggling to stay alive by pricing them into a segment of the market that, even as gas prices peaked, couldn't get more than 3% market penetration. Given Friedman's concern for emissions, it's worth noting that battery technology is pretty dirty - mining and smelting nickel is dirty enough, but Friedman's demand for instant hybrid gratification will probably lead to the wide use of lead-based batteries.

Meanwhile, perhaps Friedman should take a step back and ask, which car company is it that's trying to use breakthrough, cleaner battery technology in a future generation of hybrids. Not that I want to diminish the advances Toyota has made with its NiCad hybrids, but, could it be... GM with the LIon-powered Chevy Volt?

Friedman also presupposes that nothing better will come along. Forcing the domestic auto makers to spend tens of billions locking themselves into a 100% hybrid fleet, and to do it so quickly that they really have no other room for R&D (even assuming Friedman's proposed law permits them to explore other technologies), may make Friedman feel better, but it puts them at a disadvantage in developing other forms of clean, fuel efficient vehicles.

Yes, the Big 3 need to change their ways. Yes, their past contempt for fuel efficiency is part of why they're in so deep a hole. Yes, their past contempt for environmental concerns is reproachable. (And is it ancient history to bring up how they helped destroy public transportation?) But for all of their faults, dictating the details of their future products has the potential to impair their future competitiveness, preventing them from developing fuel-efficient gasoline and flex fuel vehicles, while impeding the development of cleaner, more fuel-efficient non-hybrid vehicles.

At the end of the day, it's a bit like calling on Congress to legislate that the New York Times overcome its financial struggles and create a newspaper for a new century by publishing entirely through Twitter. It's one thing to know enough about something to be dangerous; Friedman's not even quite to the point of knowing that much about cars.

Free Markets At Work

The inimitable Rush Limbaugh:

Now, here in the United States, for a whole host of reasons, chief among them the high price of gasoline - But I also think there's a herd mentality in this, too. People apparently, supposedly, according to Drive-By Media reports, for the last two months, three months, have been showing up at automobile dealerships and trying to trade in their SUVs and other automobiles that are, quote, unquote, gas hogs, 'cause they can't afford 'em anymore with the tipping point price of gasoline now reaching four bucks per gallon. So we here in America, the most prosperous, the most advanced, the freest, greatest potential, the most amazing collection of human beings in the history of collections of human beings, we are getting rid of our SUVs and pickup trucks, and we are in the process of downsizing to driving bubbles with wheels, lawn mowers with wheels, battery powered cars and so for forth, what are they doing in China?

What are the ChiComs doing - while we move ourselves back to the Stone Age - well, at least in that direction. China's most popular car is an SUV. SUV sales in China are exploding. "Nodding his head to the disco music blaring out of his car's nine speakers, Zhang Linsen swings the shiny, black Hummer H2 out of his company's gates and on to the spacious four-lane road. 'In China, size matters,' says Zhang, the 44-year-old founder of a media and graphic design company. 'People want to have a car that shows off their status in society. No one wants to buy small.' Zhang grasps the wheels of his Hummer, also called a fierce horse in Chinese, and hits the accelerator. Car ownership in China is exploding, and it's not only cars but also sport-utility vehicles, pickup trucks and other gas-guzzling rides."

How can we be living in this horror, where Americans respond to market forces by buying fuel efficient vehicles while China's new elite do not?

Folks, I don't know what the price of gasoline is in China and I don't know to what extent, if any, it is subsidized - okay, it is subsidized. See, the ChiComs need their economy growing. They need people driving around, moving around. They need people to be able to afford fuel, so they're subsidizing fuel. They're not bailing people out of stupid home mortgage messes. They're buying their gasoline for them, because they need an economy.

It defies parody.

Almost Seven Years Late....

You know what would have been a suitable time for the New York Times to advocate a gas tax? The months following 9/11. Instead we seemed to get what amounted to a quiet endorsement of Dick Cheney's position, "Conservation may be a personal virtue, but it is not a sufficient basis for a sound, comprehensive energy policy."

Gas Taxes

Following the lead of Charmas Friedhammer, the New York Times opines,

Expensive gasoline is not good news for most American families. In some rural areas where people must drive long distances, and a pickup is more of a necessity than a lifestyle choice, filling up the tank can eat up nearly 15 percent of a worker’s take-home income. Pricey gasoline is acting as a brake on the economy and pushing up the price of food and other goods.

Still, Americans’ response to rising gasoline prices makes an excellent case for a gas tax. It proves that drivers will change their behavior in response to high fuel prices. And even if Detroit doesn’t buy global warming, drivers can help persuade it to embrace fuel efficiency.

Right. Because there's no better time for new, regressive taxation than when working Americans are already struggling.

The Charmas Friedhammer Gas Tax

For years, Thomas Friedman has endorsed substantial increases in the gax tax. Recently he took a different tack, suggesting a tax to the level of $4/gallon, something that is perhaps best described as a "windfall profits protection tax" or a "price control". Today, Charles Krauthammer claims, "That's my idea":

For 25 years and with utter futility (starting with "The Oil-Bust Panic," the New Republic, February 1983), I have been advocating the cure: a U.S. energy tax as a way to curtail consumption and keep the money at home. On this page in May 2004 (and again in November 2005), I called for "the government - through a tax - to establish a new floor for gasoline," by fully taxing any drop in price below a certain benchmark. The point was to suppress demand and to keep the savings (from any subsequent world price drop) at home in the U.S. Treasury rather than going abroad. At the time, oil was $41 a barrel. It is now $123.

Sure, because (as with Friedman's version) no players in the market would notice that they could simply increase their profits to the amount of the tax, and all oil companies are based in the United States.

Krauthammer complains that instead of imposing his beloved price control, the federal government attempted various forms of regulation, such as CAFE standards, that he sees as having failed to achieve their goals. It's obviously not the case that Krauthammer opposes government meddling in the marketplace, as his tax proposals and price controls do just that. Perhaps he sees taxation as the best way for the government to mold individual behavior.

Krauthammer no longer sees price controls as sufficient - now he's incorporating Friedman's call for periodic, substantial increases in the gas tax:

Want to wean us off oil? Be open and honest. The British are paying $8 a gallon for petrol. Goldman Sachs is predicting we will be paying $6 by next year. Why have the extra $2 (above the current $4) go abroad? Have it go to the U.S. Treasury as a gasoline tax and be recycled back into lower payroll taxes.

Krauthammer believes that the price of oil on the world market is pegged to the U.S. gas tax, such that oil prices will stabilize if the U.S. imposes a $2/gallon gas tax? Really? And then by recycling the money back into the hands of consumers, they'll what? Buy televisions instead of filling up their cars? Or perhaps they'll notice that public transportation continues to be overwhelmed and underfunded and wonder why, despite their enormous common ground, Krauthammer parted with Friedman on the use of gas taxes to fund and expand public transportation.

Announce a schedule of gas tax hikes of 50 cents every six months for the next two years. And put a tax floor under $4 gasoline, so that as high gas prices transform the U.S. auto fleet, change driving habits and thus hugely reduce U.S. demand - and bring down world crude oil prices - the American consumer and the American economy reap all of the benefit.

Thank you Charmas Friedhammer. And once this fantasy comes true, and the public is "thanking" Congress for setting an effective price floor on gasoline at $6/gallon, demand for an overstretched public transportation system is way past its limits, and crude oil prices have continued to climb because (as it turns out) the price per barrel isn't defined exclusively by U.S. gasoline prices, what will Krauthammer say when his "conservative" peers are blasting President Obama (or, if McCain is elected, President Clinton) for for the weaknesses of his plan? That is to say, will Krauthammer join them or will he ignore them - I doubt he would even see a third potential approach.

And am I supposed to overlook Krauthammer's timing here? He didn't propose a $2 gallon gas tax back in 2001. Back then, he claims he "only" wanted a price control that would create windfall profits for gasoline refiners. He still doesn't favor providing states and local governments with the resources they need to upgrade and update their public transportation systems. People will still be stuck driving cars, because his policies don't involve the creation and expansion of alternatives. The poorest workers who are still stuck driving will be paying $75-$100/tank to fill up their cars, and we're supposed to believe that lower payroll taxes will put that back in their paychecks? Krauthammer has an amazing ability to make pretty much any idea regressive and retrograde.

More Truth Than You Can Handle

In case you haven't yet had enough of pundits wishing that politicians would tell the truth as they see it, Thomas Friedman offers us some more truthiness. Friedman opens:

Imagine for a minute, just a minute, that someone running for president was able to actually tell the truth, the real truth, to the American people about what would be the best — I mean really the best — energy policy for the long-term economic health and security of our country. I realize this is a fantasy, but play along with me for a minute. What would this mythical, totally imaginary, truth-telling candidate say?

At this point you're probably already thinking, "I don't know, but I suspect it's something different than what you're about to say." Perhaps you're expecting that it will be yet another call by Friedman for an increased gas tax.

No, our mythical candidate would say the long-term answer is to go exactly the other way: guarantee people a high price of gasoline — forever.

This candidate would note that $4-a-gallon gasoline is really starting to impact driving behavior and buying behavior in way that $3-a-gallon gas did not. The first time we got such a strong price signal, after the 1973 oil shock, we responded as a country by demanding and producing more fuel-efficient cars. But as soon as oil prices started falling in the late 1980s and early 1990s, we let Detroit get us readdicted to gas guzzlers, and the price steadily crept back up to where it is today.

We must not make that mistake again. Therefore, what our mythical candidate would be proposing, argues the energy economist Philip Verleger Jr., is a “price floor” for gasoline: $4 a gallon for regular unleaded, which is still half the going rate in Europe today.

Price controls? Friedman is literally suggesting that having "had the courage to tell voters that the McCain-Clinton summer gas-giveaway plan was a fraud", Barack Obama should guarantee windfall oil company profits by preventing the free market from ever leading to a gas price below $4/gallon?

Wouldn’t it be amazing if he took the next step and put the right plan before the American people? Wouldn’t that just be amazing?

It sure would, Mr. Friedman, but (so sorry) your plan isn't the right one.