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Old 12-10-2008, 01:01 PM   #1
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Advice for the "Car Czar"

In light of this supposed "Car Czar" that Washington wants to appoint to supervise the restructuring of the Big 3 automakers, here is some great advice I found on CNN.com. Pay peticular attention to #2!

I've been reading about this bailout constantly! ha ha



By Alex Taylor III, senior editor
December 10, 2008: 1:04 PM ET



NEW YORK (Fortune) -- Dear Car Czar,

Now that the White House and congressional Democrats have agreed on the shape of an auto rescue package, it is time to get serious about your proposed new duties.

Under the terms currently discussed, you would be tasked with shaping a restructuring of the industry and keeping an eye on how the government's money gets spent. That's all well and good, but there is a lot of opportunity for mischief here, as well as inflicting some big-time damage.

So assuming you will be coming from outside the auto industry and share prejudices similar to those displayed by congressional representatives from non-auto states - as well as newspaper editorialists who ride bicycles to work - I thought you might appreciate some suggestions on what NOT to do.

1) Don't ban the auto executives from their corporate jets. As much as we all enjoyed seeing General Motors CEO Rick Wagoner stuffing his lanky frame into a Chevy Malibu for the drive to Washington, that really isn't a productive way for him to spend his time. Neither is flying commercial. You know what air travel is like these days, and you can't get much work done on an airplane surrounded by all those prying eyes.

2) Remember that developing a new car is like a pregnancy: There is a defined length of time involved that can't be shortened without dire consequences. So let's not have any more questions about why Ford (F, Fortune 500) and Chrysler are introducing new pickup trucks in the teeth of a recession. Those trucks weren't thought up yesterday; they have been in development for four years. To can them now - or even delay their arrival - would cost tens of millions of dollars.

3) Don't expect the automakers alone to wean America from its gas-guzzling habits. In the words of GM's Bob Lutz, forcing Detroit to build small cars so that we consume less foreign oil is like trying to prevent obesity by forcing clothiers to make garments in smaller sizes. GM (GM, Fortune 500) made the right decision not to build hybrids when Toyota did: unlike in Japan, where gasoline is expensive, there was no market for them in North America.

Where GM did go astray, in case you are wondering, is in not moving quickly enough to switch from body-on-frame SUVs to crossovers, which are safer and get better fuel economy. They were making so much money on the old ones, they couldn't bring themselves to change.

4) Never forget that you can't force consumers to buy cars they don't want. You may decide you want everybody in fuel-sipping minicars, or in rubber-bumpered safety cars, but if the automakers can't build them and sell them at a profit, what's the point?

One of the reasons Detroit is in a bind is that government fuel economy regulations have forced them to build small cars that consumers don't want and thus must be sold at a loss. You are probably tired of hearing this by now, but a $2-a-gallon gas tax would have gotten people into smaller cars without distorting the marketplace.

5) Inflict equal pain on everyone. One of the reasons GM still supports money-losing brands like Saturn and Saab is that it can't afford to close down their independent dealers. State-by-state franchise laws offer them rock-solid protection should an automaker eliminate a brand.

Dealers need to give a little and so do the United Auto Workers - they are still making more than their non-union counterparts at the transplants. If you want to punish the auto executives too, make them promise to spend half their time outside Detroit so they can see what the rest of the world is driving.

6) Don't be too hard on the automakers. I've never met one (well, maybe one or two) who wasn't sincere, honest, and hardworking. Sure, they have made some boneheaded calls by focusing on short-term results instead of long-term trends, but don't forget - GM and Ford have both been in business for more than 100 years, and old companies become encrusted with customers and practices the way barnacles grow on a ship.

They haven't been competing on a level paying field with import manufacturers who were able to start with a clean sheet of paper a few decades ago when it came to choosing and locating dealers and building factories.

Oh, and by the way, they haven't been getting rich at the same time that they fleeced investors, the way some of the boys on Wall Street did. Every stock option ever awarded in Detroit is under so much water it has probably drowned by now.

Sincerely,

Alex Taylor III
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Old 12-10-2008, 01:23 PM   #2
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That's really great except for the part about the $2.00 gasoline tax.

That's just plain STUPID.

There are plenty of other ways to make the planet greener than taxing the daylights out of commuters. Stop trying to force the people who like cars to pay through the nose when there are far worse contributors to global warming than cars.
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Old 12-10-2008, 01:26 PM   #3
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I must agree with ya, at first I took that as a tax credit, I had to read it a time or two...
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Old 12-10-2008, 01:32 PM   #4
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That's really great except for the part about the $2.00 gasoline tax.

That's just plain STUPID.

There are plenty of other ways to make the planet greener than taxing the daylights out of commuters. Stop trying to force the people who like cars to pay through the nose when there are far worse contributors to global warming than cars.
I agree and don't want to be taxed either...but the point is (and was proven when gas hit $4) the only thing that will impact consumer's choice is $$, not CAFE, etc., so if they wanted to force consumers into fuel eff. cars a tax is the way to go. Look what has happened now--car companies switched from big trucks after gas prices spiked quickly, but now that gas has fallen so has the demand for small fuel eff. cars (I know demand has fallen for everything, but look at the small car's numbers).
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Old 12-10-2008, 01:41 PM   #5
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I agree and don't want to be taxed either...but the point is (and was proven when gas hit $4) the only thing that will impact consumer's choice is $$, not CAFE, etc., so if they wanted to force consumers into fuel eff. cars a tax is the way to go. Look what has happened now--car companies switched from big trucks after gas prices spiked quickly, but now that gas has fallen so has the demand for small fuel eff. cars (I know demand has fallen for everything, but look at the small car's numbers).
You are playing a VERY DANGEROUS game when you encourage the government to impose behavior modification through taxation!!!!!!!!!!!!

This country is coming critically close to a nation of government dependency anyway -- we don't need to encourage it.
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Old 12-10-2008, 01:54 PM   #6
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You are playing a VERY DANGEROUS game when you encourage the government to impose behavior modification through taxation!!!!!!!!!!!!

This country is coming critically close to a nation of government dependency anyway -- we don't need to encourage it.
Critically close to Gubment dependency? Too late, its already here.
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Old 12-10-2008, 02:12 PM   #7
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I agree with everything except that $2/gallon tax, however, there are two major omissions.

1) The government needs to stop masturbating the foreign manufacturers. Stop giving them tax benefits for setting up factories in the States. I am all for bringing manufacturing jobs here, but make the foreign manufacturers pay the same protective tariffs that GM, Ford, and Chrysler pay elsewhere. Stop lauding them for making fuel efficient, high quality cars. Detroit makes as many, if not more high quality/fuel efficient models. I would like to remind the assholes in Congress that American manufacturers were not the only ones who were tempted by high profit margin market segment of trucks/large SUVs. Toyota spent north of $300 million to build a factory in the heart of truck country, San Antonio, Texas, and they lost their asses on that venture. Nissan has abandoned their Titan model* and is having Dodge build them as a rebadged Ram.

2) Stop calling it the Car Czar. This is the stupidest ****ing name imaginable. No alternatives come to my mind, but anything is better than this.

*Has anyone else noticed that the only people who drive Titans are Crooked-Hat-Guys who wear Affliction T-shirts and have enormous TAPOUT stickers all over their DoucheMobiles? I say good riddance.
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Old 12-10-2008, 02:18 PM   #8
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Something else I forgot to mention-

Everyone in the automotive business is hurting. Toyota sales are down upwards of 30% from last November, and Honda's sales are down almost as much. The way that these hearings are being conducted makes it look like the Japanese manufacturers are riding high because of GM's collapse, but Honda can't even afford to fund an F1 team next year.
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Old 12-10-2008, 02:22 PM   #9
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I have to say, I agree with the gas tax. They do it in Europe, and it's works for a reason.

How much gas did we use when it went to 4.00 a gallon? LESS than the year before. That was unpresidented. If the government truly wants the country to lower it's oil dependancy in the SHORT term, the only proven way to do that is to make it undesireable through taxes...

Interfering in corporate policy and telling companies what to make doesn't work -- because it drives up vehicle costs, and screws with the consumer....either way, WE are going to pay - and frankly, I'd rather have my money used effectively.

Heck, maybe we might pay off some of our debt in the meantime.
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Old 12-10-2008, 02:26 PM   #10
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You are playing a VERY DANGEROUS game when you encourage the government to impose behavior modification through taxation!!!!!!!!!!!!

This country is coming critically close to a nation of government dependency anyway -- we don't need to encourage it.
As I stated in the beginning of my post---I do not agree that it should be done! But what I was saying was that if the government wants to change consumers' behaviors for the long term this would be a way to do it since CAFE was what they came up with instead--and most would agree that that is a disaster!
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Old 12-10-2008, 02:32 PM   #11
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I have to say, I agree with the gas tax. They do it in Europe, and it's works for a reason.

How much gas did we use when it went to 4.00 a gallon? LESS than the year before. That was unpresidented. If the government truly wants the country to lower it's oil dependancy in the SHORT term, the only proven way to do that is to make it undesireable through taxes...

Interfering in corporate policy and telling companies what to make doesn't work -- because it drives up vehicle costs, and screws with the consumer....either way, WE are going to pay - and frankly, I'd rather have my money used effectively.

Heck, maybe we might pay off some of our debt in the meantime.
Does this mean that you did no bitching whatsoever when oil cost $150 a barrel? I don't think so.
The reason we are paying less than $2 a gallon now is because the oil market was driven artificially high by speculative investors hoping to make a quick buck by the ever rising price of oil. The market collapsed (you yourself claim this in your post) and here we are with $45/barrel. What is to prevent the market from doing the same thing when the government wants to make a quick buck? Nothing. The same thing will happen that did this summer. People will have to spend more of their income on fuel, and money that could be spent elsewhere will go to support an artificial marketplace.
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Old 12-10-2008, 03:02 PM   #12
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Does this mean that you did no bitching whatsoever when oil cost $150 a barrel? I don't think so.
Actually...I didn't. Sorry... I knew what was happening in the greater scheme of things, and I viewed it as a necessary evil...and wakeup call, if you will, to a country grown fat and lazy on cheap fuel. I also realize this is a highly unpopular view...but it's the most effective way to do this whole "use less oil" thing that I've looked into. And it's my prefered route as opposed to CAFE.

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The reason we are paying less than $2 a gallon now is because the oil market was driven artificially high by speculative investors hoping to make a quick buck by the ever rising price of oil. The market collapsed (you yourself claim this in your post) and here we are with $45/barrel.
Yes, and I do get that. But now prices are artifically low because oil is a commoditiy, and commodity prices are dropping like a rock due to the global economy spiralling out of control (usually down). Don't expect gas to stay this low for any longer than the economy is down.

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What is to prevent the market from doing the same thing when the government wants to make a quick buck? Nothing. The same thing will happen that did this summer. People will have to spend more of their income on fuel, and money that could be spent elsewhere will go to support an artificial marketplace.
What's to prevent the gov. from raising income taxes, or property taxes? Or instituting an air tax per breath you take? In reality, they can do whatever the heck they want when it comes to taxes...that's one of the government's influence on economics. They already tax gas...so they can do what your asking on a whim if they so choose...bumping the tax up isn't going to change that.
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Old 12-10-2008, 03:06 PM   #13
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the problem is people forget that government is a "necessary evil." they instead look at it as the source of justice, not an instrument of it when necessary, which was a core belief when this country was founded.
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Old 12-10-2008, 03:08 PM   #14
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I have to say, I agree with the gas tax. They do it in Europe, and it's works for a reason.

How much gas did we use when it went to 4.00 a gallon? LESS than the year before. That was unpresidented. If the government truly wants the country to lower it's oil dependancy in the SHORT term, the only proven way to do that is to make it undesireable through taxes...

Interfering in corporate policy and telling companies what to make doesn't work -- because it drives up vehicle costs, and screws with the consumer....either way, WE are going to pay - and frankly, I'd rather have my money used effectively.

Heck, maybe we might pay off some of our debt in the meantime.

Sorry Dragon. this is a no go.... Our government already takes the biggest chunk, over 30% depending on your state, of the price per gallon.

The decrease in consumption was less that 5% when gas was that high. Cost vs Reward on a gas tax is in the negative. Because in the end we pay more for the same amount of gas.

Not, directed at Dragon, but all of us:

Why are we in such a hurry to give the Gov. more of our money? Does the Gov give us more money when we over spend? No, but they sure do give money to the banks that loan us that money we can't pay back. I don't see the logic in giving the Gov more money when they can't control what they have now. When my daughter smacks another child with a stick, I don't give her a bigger stick and say, "that stick wasn't big enough to knock the other child out so here's a bigger one." No, I take it away until she can prove to me she will be responsible with said stick...

Very simple example, I know. Not meant to insult anyone
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Old 12-10-2008, 03:19 PM   #15
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The decrease in consumption was less that 5% when gas was that high. Cost vs Reward on a gas tax is in the negative.
Is it?
Compare the Cost v. Reward of this strategy to the Cost v. Reward of requiring companies to make 45, 50, 55mpg cars...cars that won't even make a dent in our consumption for 10 or so years. How would you like to pay 20k + for a bottom-barrel 'Cobalt' (but it gets 50mpg!!).

Like I said...I'm hard pressed to find anybody who agrees with me, but the bottom line is we ARE going to pay, one way or the other...I find this to be the most effective use of our money in terms of reduced oil consumption. That is, untill we electricy, or hydrogenify, or ethanolify our vehicles...then it'll won't really matter....


Anyways...car Czar....I thought that was Bob Lutz?
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Old 12-10-2008, 03:22 PM   #16
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IMO

The Gas tax would work when the demand elasticity of gas is like a Stretch-Armstong pulled by two 747s. Right now the curve is has proven to move a little but not a lot. And remember, Supply is key. They can stop producing and rise the price on current demand to compensate. Then, the can produce like crazy and tax it and you'll pay 2.10 a gallon with the tax and that's fine by me. But like that will ever happen with OPEC. Gas is not like sigarettes. They are not killing people, just killing wallets. Now, I agree with Dragon on this one. It's proven to curve demand on something, you tax the crap out of it. That's way there's taxes on cigarettes.

I propose, instead of a gas tax, just modify the gas guzzler tax a bit, (I know, bad news for the Top Doggers) however, only tax the MPG over standard and modify it every 5 or so years. In other words. Charge like $500 per MPG under the 25 HW allowable. And give a tax break to the ones that get over 30 MPG. Reward by omission works too Senators, hope you are listening. Never heard of a hybrid tax break? You are going to have to put gas in them as it is.

Example: Chevy Corvette Gets 19 MGP highway. Tax is $3000 Chevy Malibu Hybrid gets 33 Highway? $1500 tax Break. Get it? Huh?? Don't always have to tax it Geniuses, (senators). There is no law that states: If it exists its taxable. If it has a name, it has a tax.

Last time I checked, there will always be a DEMAND for HI-PO, Speed and pleasure in their cars. They cannot stop them from SUPPLING. I've never heard of someone asking to have really shitty gas milage in their car. Oh, except for that city counselman on Robocop that asked for a car from Detroit with really shitty gas milage as one of his demands when he held the mayor hostage.

Performance will evolve. I just hope that the FED/GOV doesn't have unrealistic expectations.
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Old 12-10-2008, 03:25 PM   #17
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I will agree with Dragon especially since this makes more sense than CAFE.

I think that everyone is thinking in huge numbers with taxing $2 a gallon. What if the tax was $0.50 a gallon and in return all of the money that was then used to spur energy conservation such as the tax credits for more fuel efficient cars. Or divert some money into a more efficient power grid. I know that is not going to happen because tax money never ends up where it is supposed to go.

But the biggest problem with the gas tax is that the less you earn the more you feel it.

And I also like Fandango's idea of tax based on gas consumption.
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Old 12-10-2008, 03:27 PM   #18
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Is it?
Compare the Cost v. Reward of this strategy to the Cost v. Reward of requiring companies to make 45, 50, 55mpg cars...cars that won't even make a dent in our consumption for 10 or so years. How would you like to pay 20k + for a bottom-barrel 'Cobalt' (but it gets 50mpg!!).

Like I said...I'm hard pressed to find anybody who agrees with me, but the bottom line is we ARE going to pay, one way or the other...I find this to be the most effective use of our money in terms of reduced oil consumption. That is, untill we electricy, or hydrogenify, or ethanolify our vehicles...then it'll won't really matter....


Anyways...car Czar....I thought that was Bob Lutz?
I should have been more clear, C v R for the consumer at the pump is in the negative. I shouldn't have left that out.

And I do completely agree with you that the Gov setting unrealistic standards to get votes is going to be rediculously to the disadvantage of the car consumer also. I just don't want to compound the problem by adding a gas tax to the cost of high technology cars...

Sorry guys, I'm firmly in the category of cut spending and cut programs first. Get the Gov under control and then see what the revenue needs are.

They don't need any more money.
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Old 12-10-2008, 04:44 PM   #19
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considering they demand money at gunpoint (try not paying your taxes), no, they don't need anymore
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Old 12-10-2008, 04:58 PM   #20
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You are playing a VERY DANGEROUS game when you encourage the government to impose behavior modification through taxation!!!!!!!!!!!!

This country is coming critically close to a nation of government dependency anyway -- we don't need to encourage it.
Every nation in the world depends on its government, whether it knows it or not. Even if it that gpvernment would rather brand you like cattle than provide you food, it is quite a few steps above anarchy.
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Old 12-10-2008, 05:19 PM   #21
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I've never much agreed with Alex Taylor before, but he is spot on. The guy does know the industry, unlike a certain NYT writer or documentary film maker.

As an aside, I'm generally a free market, small government guy, but if you want to do behavior modification taxes are the way to do it. Not only do you kill two birds (behavior modification and revenue generation) with one stone, but you keep the market principles of supply and demand intact. Now where I go small government is the amount that I think the government should be modifying behavior. In the end, I agree 100% with Alex Taylor that a higher gasoline tax would be much more beneficial than CAFE laws because automakers could build small, efficient cars consumers were demanding and make a profit rather than being forced to build something consumers just don't want because gas is so cheap.
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Old 12-10-2008, 09:49 PM   #22
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Here is my .02 cents. Why don't we just have a set gas price? Then demand wouldn't just dictate what the price is, thus, not artificially inflating the market. The oil companies get this much, and the govt. gets this much, and you can budget accordingly. In my opinion, i think the oil crisis is the reason the economy is in the shape it is now. Not only did people not drive as much, and had money taken out of their pockets by gas, but it also drove the prices of products up considerably because of the price of freight. Especially...wait for it...the price of building materials thus the housing market went up in price, and people wouldn't build, even when they could get loans. I would propose either a set price, or a min. cap/max. cap. Then it can be budgeted in homes, as well as with the government. I know it isn't as much of free enterprise, but oil companies are practically a monopoly now days. Something has to be done. In the eyes of controlling what cars people buy, putting a 2 dollar tax is a decent idea, BUT, what about everything else it effects? What about freight for product you buy? How about food? It becomes more than just a question of what car you buy then, it becomes something that isn't in your hands, which is unfair. Now, if you give a tax break and exclude certain industries, that is an idea for thought. Just my .02
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Old 12-10-2008, 10:20 PM   #23
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Here is my .02 cents. Why don't we just have a set gas price? Then demand wouldn't just dictate what the price is, thus, not artificially inflating the market. The oil companies get this much, and the govt. gets this much, and you can budget accordingly. In my opinion, i think the oil crisis is the reason the economy is in the shape it is now. Not only did people not drive as much, and had money taken out of their pockets by gas, but it also drove the prices of products up considerably because of the price of freight. Especially...wait for it...the price of building materials thus the housing market went up in price, and people wouldn't build, even when they could get loans. I would propose either a set price, or a min. cap/max. cap. Then it can be budgeted in homes, as well as with the government. I know it isn't as much of free enterprise, but oil companies are practically a monopoly now days. Something has to be done. In the eyes of controlling what cars people buy, putting a 2 dollar tax is a decent idea, BUT, what about everything else it effects? What about freight for product you buy? How about food? It becomes more than just a question of what car you buy then, it becomes something that isn't in your hands, which is unfair. Now, if you give a tax break and exclude certain industries, that is an idea for thought. Just my .02

Our country's current financial situation is due to more than the rise in gas prices....Too many Americans were living way beyond their means for too long. Mortgages taken out that could not be repaid, 2nd mortgages on inflated housing prices to further a lifestyle that was beyond their means, etc. A complete lapse in regulations that should have prevented this. A tax would impact pricing of other things, but not in such a way that it would start a meltdown like we are experiencing now.
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Old 12-11-2008, 12:32 AM   #24
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Originally Posted by Dragoneye View Post
I have to say, I agree with the gas tax. They do it in Europe, and it's works for a reason.

How much gas did we use when it went to 4.00 a gallon? LESS than the year before. That was unpresidented. If the government truly wants the country to lower it's oil dependancy in the SHORT term, the only proven way to do that is to make it undesireable through taxes...

Interfering in corporate policy and telling companies what to make doesn't work -- because it drives up vehicle costs, and screws with the consumer....either way, WE are going to pay - and frankly, I'd rather have my money used effectively.

Heck, maybe we might pay off some of our debt in the meantime.
That's exactly what is done up here. It certainly gets people thinking when they go car shopping.
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Old 12-11-2008, 07:32 AM   #25
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Every nation in the world depends on its government, whether it knows it or not. Even if it that gpvernment would rather brand you like cattle than provide you food, it is quite a few steps above anarchy.
Think about government dependency from a financial standpoint. Need a good example of financial dependence on a government? Take a trip to New Orleans.

The only thing that you should DEPEND upon the U.S. government to do, is to defend the rights guaranteed to you by the U.S. Constitution and the bill of rights.

The primary purpose of the U.S. government is defense of the free people, foreign and domestic – NOT to be your counselor in life or manipulate your choices as a free individual.
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