- The Washington Times - Sunday, April 30, 2006

Gas taxes and trust funds

The only way to relieve the “pain at the pump” is to lower the demand and stack up the supply (“Market fuel prices drop,” Page 1, Friday). It is one of the first “laws” of economy. If there is an abundance of a product, the price will drop. If there is a shortage of a product, the price will rise.

This is a relatively simple plan to cause the gasoline supply to grow:

The first tactic is when you buy gasoline, just buy $10 worth at a time. I know this will cause you to stop for gasoline two or three times during the week. I know this will be an inconvenience, but it is the simplest way.

The second tactic is the next time you buy gas, fill up the tank. Then, when you have used up a quarter-tank of gas, you fill’er up again. I think you will find it will be about $10. Lots of people think that you get better gas mileage when the tank is above half full.

Finally, for the slide rule types who think the above two tactics won’t work, try this: For the next month, each Monday, write down your mileage. When you have four weeks worth of entries, total the four numbers. Then, divide by four. This will give you the average of the miles you drive each week. Now, figure out your gas mileage. Let’s say you drive 200 miles each week and you get 20 miles per gallon. Then you need 10 gallons of gasoline to get yourself through the week.

Now think of this: If you have an 18-gallon tank on your car and you only buy 10 gallons of gas at say, $3 a gallon, you have $24 to keep in your pocket and not put it in the oil companies’ pocket.

If you use either of the above tactics, most of the gasoline will remain in the service station ground tanks. The service station owners will have to order less gasoline from the tank farms. The tank farm owners will have to slow their ordering from the refineries because their huge tanks will be filled above their normal level. The refineries demand for crude oil will drop because they can’t sell the normal amount. The pipelines and huge oil tankers will have plenty of oil but nowhere to offload it.

The only way to make room in the tanks is to sell it and the only way to sell it is to lower the price to where you, the consumer, will accept it.


Columbus, Ohio

I zeroed in on one of Norman Hendrickson’s paragraphs in his Letter to the Editor on Saturday: “It is the government’s job to build roads … but the money is held in the general fund and used for other things as well.” (“Understanding high gas prices”) Anyone caring to dig into the basis for this statement will find a mother lode of obfuscation going back 50 or 60 years, and probably is one of the main reasons for the present sad state of federal finances.

I presume Mr. Hendrickson is referring to the federal Highway Trust Fund. This so-called trust fund, like many others — the most talked about being the Social Security Trust Fund, is lumped together in the nonpublic debt. Common usage for the term “trust fund,” refers to a collection of marketable assets (stocks, bonds, collectibles, real estate, etc.) overseen by a trustee. In other words it represents private, not public, assets that can be liquidated in the future for some purpose. You might ask why trust fund assets, supposedly held in the federal Highway Trust Fund, are part of the federal nonpublic debt. How can an asset be a debt? This paradox can only occur in the rarefied air of Congress.

It is a fact that the federal financial structure has no way to earmark any given dollar of taxes. A dollar of tax collected via the gas tax is no different from a dollar of tax collected via the payroll tax, or the personal federal income tax. In any given year, all taxes are spent and if taxes fall short of expenditures then the Treasury is required to sell bonds in the credit markets to make up the difference.

So what is the purpose of the federal Highway Trust Fund? For every dollar of gas tax collected, the Treasury records a dollar of nonmarketable security in the Highway Trust Fund. These nonmarketable bonds have no meaning outside of the Treasury’s accounting system. Their only purpose is to record and track future Treasury spending authority. When it comes time to make an expenditure on highways, the Treasury looks in the so-called trust fund to see if it has authority (positive trust fund balance) to then go out and spend future taxes (from any source) or sell marketable bonds in the credit markets. Congress can change spending authority any time it wants to, so the trust funds are really economically irrelevant.

I am afraid the primary purpose of the “trust fund” terminology is just to confuse the public as to the true state of federal finances and to relieve Congress of having to make a great number of annual appropriations. The trust funds conveniently put everything on automatic pilot. Thank God the oil companies cannot operate this way.



Hughes’ politeness offensive

In her column, “A nanny guide to making nice,” (Op-Ed, April 24) Suzanne Fields quotes three of my favorite people — Shakespeare, Tocqueville and Judith Martin — on the virtue of Americans behaving politely, especially when they are visiting other people’s countries.

Of course, American tourists can’t avoid representing the most powerful nation on Earth, but they can attempt to honor Shakespeare’s words in “Measure for Measure”: “O, it is excellent to have a giant’s strength; but it is tyrannous to use it like a giant.”

In world politics, good manners and politeness have their limits. In confronting domestic brutality or predatory tyranny, a smile and a handshake are not enough. Mrs. Fields rightly acknowledges that Karen Hughes’ politeness offensive has a minimal impact on America’s capacity to fight terror or maintain stability.


Chevy Chase

Illegal immigration and tax amnesty

Senate Democrats, some Republicans and President Bush are setting exactly the wrong example by considering a path to citizenship for illegal aliens already in the country and an expanded number of green cards (“Bush, senators agree on alien citizenship, shut out critics,” Page 1, Wednesday).

Apart from the fact that it is clear we must close our borders before even considering any such quasi-amnesty proposals, it is ludicrous to consider giving out more green cards without knowing the number of fake cards currently in circulation from counterfeiting.

More important, the proposed program sets a dubious precedent. Suppose, as a hypothetical, taxpayers in the top percentiles, who are paying the vast majority of taxes, decided to withhold 15 percent of taxes owed to cover the additional costs to them of badly mismanaged immigration and energy programs by the federal government. Is it likely that Congress and Mr. Bush would immediately leap to an amnesty program without attempting to determine how many taxpayers had withheld money and their identities? Would they dismiss the massive illegality and suggest that it’s just impossible to prosecute millions of people; it’s not practical? Would they refer to these individuals as criminals, or make up some bland characterization such as “not fully participative citizens?”

In the above scenario, which would threaten their pork and favorite social programs, both parties and the executive and legislative branches would join in condemnation of their criminal taxpaying citizens. We would discover just how forthcoming and efficient the Internal Revenue Service and the Social Security Administration can be. Senators Edward M. Kennedy, Hillary Rodham Clinton and Charles E. Schumer would introduce legislation authorizing warrantless phone interceptions by the National Security Agency of anyone making more than $50,000 as well as examination of private banking records.

Illegality is in the eye of the beholder, but I have no doubt that illegal aliens would fare far better than hardworking citizens who decided their tax dollars were being squandered on energy policies catering to unproven and alarmist environmental concerns and on programs enabling and encouraging illegal immigration without first closing our borders.

If an amnesty program is the result of these machinations, I for one will be certain to vote for a third party that promises to respect the will of the people, for it will prove that the Senate is completely controlled by politicians and not statesmen. To quote James Freeman Clarke: “The difference between a politician and a statesman is: a politician thinks of the next election and a statesman thinks of the next generation.”


Laytonsville, Md.

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