Dear Prez Bush: U.S. Should Cut Gasoline Consumption By 50%; Add Tax on Autos and SUVs That Don't Get a Minimum of 30 MPG; Signed FA
- Energy Independence Proposal Laid Out in Letter to President Bush -
- Tax Could Generate As Much As $200 Billion Annually -
- Plan Would Spur Automotive Production; Create Jobs -
- Dramatic Long-Term Positive Effect on U.S. Economy -
NEW YORK, Nov. 29 -- "Beginning in 2008, any car or SUV that cannot meet a fuel efficiency standard of 30 miles per gallon will have to pay a tax of $1,000 per year," proposes three top executives at Fred Alger Management in a letter to President George W. Bush. The tax could generate "as much as $200 billion in revenue" in its first year, and "may increase in subsequent years," the letter says.
The money management firm says that one of the biggest issues for Americans is the soaring price of gasoline and that the prospects for lower gas prices are not likely due to increasing demand from U.S. consumers, as well as soaring demand from nations such as China and soon from India.
Alger has asked President Bush to set a national goal of cutting gasoline consumption in half over the next 10 years. This, they say, needs to be adopted quickly in order to reduce America's dependency on Middle Eastern oil, which "allows U.S. motives to be questioned, fairly or not. Reducing gasoline consumption and increasing our energy independence will enhance not only our economic and military security but also ensure that the legitimacy of our foreign policy is not undermined by our energy needs," the letter to President Bush says.
A copy of the letter follows: President George W. Bush The White House 1600 Pennsylvania Avenue NW Washington, DC 20500 Dear Mr. President,
Throughout the 40 years that our firm has been managing money, the United States has risen to the challenge of leadership both at home and abroad. In your second term, we believe there is a historic opportunity for leadership in the area of energy policy, which could have a dramatic and positive effect on our economy for decades to come. Two years ago, in your State of the Union address, you underscored the importance of greater energy independence. While we support many aspects of that plan, we do not believe it directly addresses the single most important factor: gasoline consumption.
Every day, driving in the United States consumes nearly 10 million barrels of oil - which is nearly the amount we import on a daily basis. These massive imports result in a substantial trade deficit and an unhealthy reliance on energy from the Middle East.
Our nation's foreign policy is guided by principles that you have forcefully set forth. But our dependency on Middle Eastern oil allows our motives to be questioned, fairly or not. Reducing gasoline consumption and increasing our energy independence will enhance not only our economic and military security but also ensure that the legitimacy of our foreign policy is not undermined by our energy needs.
To these ends, we ask you to set a national goal of cutting gasoline consumption in half over the next 10 years. Our proposal is specific:
Beginning in 2008, any car or SUV that cannot meet a fuel efficiency
standard of 30 miles per gallon will have to pay a tax of $1000 per year.
For each year that the vehicle continues to be driven, the tax will go
up an additional $500 a year.
It's a simple plan which will trigger dramatic change. Among the benefits:
1) There are approximately 230 million passenger cars in the United States (140 million cars, 28 million SUVs, 38 million pick-ups, and 18 million vans and minivans). Few of these meet the 30 mile-per-gallon standard. That means that in the first year of this policy, the U.S. government could collect as much as $200 billion in revenue. This amount may increase in subsequent years. Some of these funds should be shared with the states, which by virtue of their responsibility to license vehicles will have a significant role in implementing this policy. In addition, older cars (twelve years or more), which will not meet the new standard, would be exempt from the tax but would be given a ration of miles-per-year, much as was done during World War II.
2) Cutting oil imports in half will reduce the U.S. trade deficit by 15 to 20 percent.
3) The tax will spur the production of smaller, fuel-efficient cars. Currently, U.S. automakers produce about 16 million vehicles annually, but there is substantial unused production capacity. The need to replace vehicles that do not meet the higher fuel efficiency standards will lead to an increase in domestic auto production to as much as 22 million to 25 million vehicles. That will in turn generate stronger GDP growth. In short, the sale and production of new, fuel-efficient vehicles will stimulate the entire economy.
4) The plan will benefit the environment and stimulate innovation, especially in diesel and hybrid technology. It will also encourage the development of refining capacity in the United States for diesel and for heavy forms of crude extracted from oil sands. Some of this is already being done, but not with the needed urgency, scale and scope.
5) Because there are no new untapped substantial oil fields and because of demand from China (and soon from India as well), higher oil prices look like they are here to stay. Only by increasing fuel efficiency will we as a nation decrease the amount Americans spend on gasoline. That will mean more disposable income, which can then be put to more productive use.
6) We will dramatically reduce our dependency on crude oil from the Middle East. With gasoline consumption cut in half, we will be able to supply most of our needs from oil production in the United States, Mexico and Venezuela and not depend so heavily on oil from Saudi Arabia, the Gulf emirates and Iraq. That will allow our foreign policy to be based entirely on principles, and viewed that way by the world. Freed from our reliance on oil from the Middle East, the United States could find its involvement in the politics of the region much reduced. And that would be a welcome development.
Americans like to do their bit for well-defined national goals. At various points in the past, we have risen to difficult challenges, sacrificed, and achieved the impossible. In 1941, Americans met the challenge of war and revamped production in a matter of months to become the industrial powerhouse for the Allies. After 1961, in response to John F. Kennedy's call for placing a man on the moon, the space program achieved what no one would have thought possible in less time than anyone could have imagined.
In short, we believe that the policy we are advocating will cause a sea change in American consumption of gasoline. It is a simple plan with dramatic effects, and we urge you, as the leader of this great nation, to implement it.
Sincerely,
Frederick M. Alger, III Daniel C. Chung Zachary Karabell
Chairman of the Board President Senior Vice President
CONTACT: Jeffrey Taufield
Kekst and Company
(212) 521-4800
