This is the worst sort of “bread and circuses” politics. It’s not about sound policy – this legislator is silent on what this entitlement for gasoline would cost the taxpayers – but rather about who can promise the most goodies paid for by other people.
State Representative George Darany would like to give every Michigan resident making $100,000 or less a state subsidy to help cover the cost of gas.
Darany, a Democrat from Dearborn, introduced House Bill 5476 in March. According to Michigan Votes, the bill would “give individuals with annual incomes below $50,000 a per-vehicle fuel subsidy of $100, payable in the form of a ‘refundable’ state income tax credit. A $75 per vehicle subsidy could be claimed by those with incomes between $50,000 and $75,000, and a $50 per vehicle subsidy for incomes between $75,000 and $100,000.”
According to the article, economic analysts are predicting that this legislation would cost Michigan taxpayers some $300 million per year. That in a state that has over $125 billion in debt obligations.
But setting the budget aspect of this aside, all this gas entitlement will do is drive gas prices even higher. A household getting a $75 fuel subsidy is likely to do $75 more worth of driving with the “free” gasoline. This will drive up demand for gasoline that, in turn, will drive up prices.
It would work not unlike the phenomena we’ve seen with tuition and fees at universities. Government subsidies haven’t made college more affordable. They’ve simply created a higher education bubble, whereby subsidized demand only drives prices ever higher (something the politicians usually use as an excuse for ever-higher subsidies).