New York Sen. Chuck Schumer authored an op-ed in Friday's New York Times in which he outlined a wildly ambitious and almost completely impractical plan to eliminate internal-combustion engines from America's roadways by 2040.
The price tag would be $454 billion over 10 years, Schumer estimated.
To make this work, the federal government would both provide rebates to consumers for buying an electric vehicle and put government dollars behind expanding the nation's charging infrastructure. Both mechanisms, Schumer thinks, would be necessary to advance EV adoption more robustly than its current pace.
If you remember 2009's Cash for Clunkers program (officially known by its congressional acronym, the "Cars Allowance Rebate System" or CARS), then Schumer's plan might strike you as Cash for Clunkers turned up to 11,000. Cash for Clunkers was a "scrappage" program that incentivized people to get rid of older, less fuel-efficient vehicles in exchange for money and a new car or truck.
At the time, the Great Recession had obliterated the US auto market, sending annual sales briefly below ten million, a staggering drop (the base level for the US market is around 15 million in annual sales). That drove General Motors and Chrysler into bailouts and bankruptcies. Credit also seized up, so the relatively modest $3 billion that was allocated to C4C was a welcome infusion that got auto lending going again in the US and set the stage for a robust recovery of sales to record levels and delivered huge profits to automakers.
Fast forward to today and Schumer's far more lavish plan looks like it could achieve something similar, spurring the electric-vehicle market and reducing the emissions that contribute to global warming.
Electric cars are nowhere near the level of market share that Schumer's plan requires
Schumer, a Democrat, wants EVs to be accessible to all, so lower-income buyers would receive a larger discount to switch to an electric can than the upper-income customers who've thus far been able to take advantage of a maximum $7,500 federal tax credit for buying an EV. Schumer argued that his plan would take 63 million gas-powered vehicles off the road by 2030; some rough math suggests that would constitute EVs taking about 40% of future sales.
This is, of course, is a patently nonsensical prediction, given that EVs currently make up 2% of US yearly sales. It might be true, as Schumer asserts, that Big Auto, Big Labor, and environmental heavyweights are behind the plan, and that acting now would prevent China from dominating the future EV market globally (which I think is going to happen anyway, due to expected growth in China's auto market, already much bigger than the US market).
But apart from turning up Cash for Clunkers to 11,000, Schumer's plan also relies on the implicit, partial nationalization of future auto finance. In effect, taxpayers would support discounted lending for vehicles that consumers wouldn't otherwise choose to own. Beyond that, creating a nationally subsidized charging infrastructure would simply swap a currently bad situation with nationally subsidized gasoline for a newly bad situation with federally funded electricity.
Perhaps this all sounds great to folks who haven't followed the miserable progress of EV adoption in the US. The critical issue here is that Schumer wants to spend nearly half a trillion dollars to get people to buy cars they don't want. At a practical level, it would be impossible to provide the supply of cheap EVs that would make this plan work, given the pricing structure and questionable profitability potential of EVs.
And even if manufacturers somehow could engineer, build, market, and make money off these vehicles, they wouldn't be the large, powerful, long-range cars and trucks that Americans favor.
I'm not a right-wing EV hater — but I do want to see some tax increases
Now, before you think I'm some right-wing EV hater, please understand that I, too, believe that it's imperative to do something about auto emissions and global warming. I have three children and I want them and my grandchildren to live on planet Earth, not Elon City on Mars or in an underground bunker. I just want to do something right now and not spend half a trillion bucks or wait around a decade.
So forget Schumer's plan and follow mine, instead.
It entails two components, one of which might be optional.
- Component number one: Raise the federal gas tax. At about $0.18 per gallon (higher for diesel), it hasn't gone up since 1993. That's 26 years of federally subsidized fossil fuels. Elevate it by $0.25 and we could raise $300 billion. But what about the other $150 billion of Schumer's estimated plan?
- Component two! That could come from a small carbon tax applied to new vehicles at the point of sale, a sort of value-added-tax that would get rolled into the financing as destination and delivery charges are today. Make it $100. Nobody would notice and in a decade it would raise $170 billion. (Gas-guzzlers are already taxed, and it's a lot more than $100.)
You literally need to get no one on board with any of this. The federal gas tax is long overdue for an increase. The money could be used to repair and improve infrastructure. But as far as global warming goes, it would as any economist knows encourage consumers to buy more hybrids and EVs, as well as more fuel-efficient gas vehicles.
People who want to buy big trucks and SUVs could still get them, but they'd have to pay up at the pump. Over time, automakers would address their pain by accelerating their fuel-efficiency innovations, something that been underway for decades as manufacturers seek to comply with existing regulations.
The carbon tax would be invisible and could enable the government to continue incentivizing EVs through the tax code. I'll admit that this would continue to skew EV sales toward affluent buyers. But that's necessary because EVs are more expensive than gas vehicles and automakers require some support to keep losing money on them.
The carbon tax, by the way, is the optional component. That leaves us with the increased gas tax, an action Congress could presumably undertake in an afternoon. (I know it's a bit more politically complicated than that, but it's certainly far simpler that Schumer's half-a-trillion giveaway.)
Why is Schumer proposing this scheme, and furthermore, why does it follow New York Rep. Alexandria Ocasio-Cortez's equally implausible Green New Deal?
Because allegedly bold actions look like it could address our climate crisis. All for it, but bold action, at the scale Schumer and AOC are talking about, is well-nigh impossible to execute.
Meanwhile, the Senate majority leader Mitch McConnell has been in Congress since 1998. He's had two decades to hike the gas tax, but hasn't, and as recently as 2017, he opposed the move. His reasoning was that the increase would disproportionately impact lower-income people. That's a fair point. But it misses that we want everybody to be dis-incentivized from buying low-MPG cars — rich, poor, and in the middle.
We've had a perfectly good path to more EVs and hybrids and reduced greenhouse-gas emissions since Bill Clinton was president. That path is still possible. It would be easy. The costs would modest, more or less invisible, and spread out over decades. The upshot would be a lot more fuel-efficient vehicles and EVs on the road. China wouldn't entirely rule the electric future (not that I think it matters).
This could happen tomorrow. Plenty of time for Sen. Schumer to come to his senses.
This is an opinion column. The thoughts expressed are those of the author(s).