Monday, February 12, 2007


From the Council of Economic Advisers, here is the new Economic Report of the President.

On page 129, you can find this analysis of gasoline taxes:

The purchase of a gallon of gasoline imposes these national security and environmental costs on everyone, not just on the buyer and seller. Though State and Federal gasoline and diesel fuel taxes and regulations help account for these other costs, many studies suggest that the total external costs of oil may be higher. Carefully crafted government policy may be a useful way to account for these additional costs. However, this objective should be balanced against additional inefficiencies that government involvement introduces into the market. Once policies are in place that ensure that individuals account for the full costs of the goods and services they consume—e.g., national security and environmental concerns—competitive markets are the most efficient means to determine how goods are produced, as well as which goods are produced in the future.
Does this qualify the CEA for membership in the Pigou Club?