The Unintended Consequences of CAFE Standards


Government has been meddling in auto design since 1975, and the consequences are beginning to hurt the ruling class.

Buried in the 11th paragraph of this Hill story about the Highway Trust Fund “running on fumes” is this little note (emphasis mine):

The traditional source of money for the highway trust fund is the 18.4 cents-per-gallon federal gas tax, but a $16 billion-per-year hole has developed as cars have become more energy efficient in recent years.

The higher gas mileage isn’t fully under the control of the government, but a large chunk of it is, thanks to federal Corporate Average Fuel Economy (CAFE) standards, which were enacted in 1975 under President Ford. The initial standard was 18 mpg for 1978 model cars, rising to 27.5 mpg by the 1985 model year. Moving forward to 2011, Obama and Congress have decided to raise the standard to a whopping 54.5 mpg by 2025.

The logic here is simple:

  • More fuel efficient cars mean people fuel up less often.
  • Fueling less often means a reduction in gas taxes paid.
  • Reduction in gas tax income to the government means programs and funds that depend on those taxes are going to have to tighten their belts.

And yet, somehow the Einsteins in government haven’t figured that out in nearly 40 years.

Oh, and rather than tighten belts, as any regular American family would do when their income drops, the government has another solution. Back to the Hill story (again, emphasis mine):

Transportation advocates have pushed Congress to consider increasing the gas tax for the first time since 1993 to close the funding gap, but lawmakers have resisted raising the price of gas for drivers in the middle of an election year.

In other words, rather than increasing efficiency or cutting costs, they’re demanding you and I, the taxpayers, fork over more of our precious dollars to solve a problem anyone with a rudimentary grasp of logic could have seen coming years ago.

That’s life in the ruling class. If unintended consequences appear, make the taxpayers foot the bill.

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Conservative Wanderer is currently Editor-in-Chief of That's Freedom You Hear! That means anything that goes wrong can be blamed on him. Previously he was a contributor to the PJ Tatler.

Posted in Domestic Policy, Tax policy

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