This is days old now, but the blogosphere wasalla-twitterearlierin the week about this paper by economist Jayanta Sen, arguing that a stiff tax on crude oil, far from bankrupting the US economy, would actually transfer more than $100 billion a year from foreign governments to US consumers.
Yes, consumers would pay steeper prices for gasoline. But since all of the oil tax revenue stays within the US, that money continues to stimulate the economy. Meanwhile, we’d import less oil—and, as a consequence, we’d export less money to pay for it. I’ll let Sen explain things:
[T]he wealth transfer savings for the United States … should be in the range of $108 to $152 billion a year. The new tax revenues … can be returned to the US consumers as a lump sum, thus providing the economic stimulus. The reduction in crude oil consumption ranges from 7.13% to 10.30% while providing a stimulus (defined as additional purchasing power to consumers) to the economy of $95 billion to $133 billion a year.
The title of Sen’s paper: "A Tax to Save the US $100 billion a Year and Solve Global Warming?" Sounds like a plan to me. Any takers?