A Square Deal

THE IMPERATIVE TO CONSERVE should be the paramount issue in the presidential campaign. American foreign policy has been shaped with eyebrows cocked toward the Persian Gulf, and the need to lessen dependence on foreign oil has emerged as unequivocal. Among the solutions suggested thus far, Rep. John B. Anderson's (R-I11.) proposal of a 50-cent gas tax coupled with a 50-per-cent cut in the Social Security tax appears the most rational.

Unlike rationing by coupon, the 50-50 plan allows individuals to make their own choices. Coupon rationing would require a sizeable bureaucracy. Furthermore, such a system would force the government to reach difficult decisions. How will the government determine how many coupons each individual should receive? Even with a "white market" for sale of unwanted coupons, to increase efficiency, the government invites speculation and inequity. Rationing coupons constitute an interference of the free market and an invasion of free choice which invites inefficiency.

Conversely, the 50-50 program would permit the free market to allocate efficiently. There has been much debate over the responsiveness of demand for gas to a price increase; but several recent studies have concluded that demand for gas has become more responsive to changes in price in the short run. There is a growing consensus that, in the long run, gas price increases will be reflected by almost proportional drops in consumption--that is, a 40-per-cent price rise would lead to roughly 40 per cent less gas consumed.

While a gas excise tax is regressive, the cut in the sharply regressive Social Security tax would free disposable income for lower income groups to compensate. If implemented, the 50-cent tax would pose a severe incremental increase in the price of a gallon of gas, a figure which would encourage wasteful drivers to consider available substitutes or contingencies, such as mass transit or carpooling. In addition, the 50-50 plan might have the indirect effect of revitalizing urban areas by presenting a disincentive to forsake the city for the suburb, thus increasing urban tax bases.

The 50-50 proposal, aims to put driving in its current perspective--a luxury. The accompanying tax cut, however, assures that those needing extra income for necessary road travel will receive it. And unlike coupon rationing, the 50-50 plan would not greatly infringe on efficiency or require a huge bureaucracy.