This is a deeply bizarre response to Roger Altman's call for an increase in the CAFE standards and a variety of other sundry environmental proposals:
In my view, the solution to the problems Altman identifies is simple: higher Pigovian taxes, such an increased tax on gasoline or a tax on carbon. Policymakers could then sit back and let market forces figure out the rest.
Altman's avoidance of this policy option is all the more surprising because the first Clinton administration proposed a BTU tax, which as I recall was a lot like a carbon tax. The BTU tax failed politically, and since then former Clinton administration officials have stopped pushing for it in the public debate. That is a shame. It was one of their best ideas.
Yes, they did push a carbon tax, and it was a political disaster. And that was during a period of cheap oil. No one with an ounce of political information or general empathy believes either party, Republican or Democratic, will or could step before the American people and explain that the problem in this country is gas is not costly enough, and we should add another dollar or two per gallon. Things don't work that way. Mankiw, who was around for some of the Bush administration's first term policy mistakes, should know that. So Altman is proposing more circuitous, but attainable, solutions. Mankiw, for his part, is arming and unleashing the perfect against the good, which is neither a sensible nor helpful way to react. We're long past the realm of the platonic. The question isn't what would be most intellectually interesting to do, but what serious measures can we actually take. It's a conversation Mankiw appears to have little interest in.
