Raise the Gas Tax

Bob Lutz, the vice-chairman for development at GM, is best known for creating gas-guzzling and eye-catching icons, like the Dodge Viper, Camaro concept and latest generation Corvette. He loves V-12's and ridiculous amounts of horsepower. So I was shocked to read this quote in today's WSJ:

"I'd say the best thing the (U.S.) government can do is to raise the gas tax by 10 or 15 cents a year until it reaches European levels," Mr. Lutz said, during an impromptu interview just before GM Europe's media event last Thursday.

That way, he says, car makers could concentrate on designing for the U.S. market the kinds of fuel efficient and increasingly luxurious smaller vehicles that characterize the European market. "In Europe people buy $30,000 Golfs," Mr. Lutz says. "People are willing to pay lots of money for extremely well equipped, fuel-efficient cars."

Welcome to the Pigou club, Bob.

UPDATE: Via Mankiw, it looks like Alan Greenspan also thinks raising the gas tax is a good idea.