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Andrew Samwick Says: Don't Linger in this CAFE
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"Grasping Reality with Both Hands
The Semi-Daily Journal of Economist Brad DeLong: A Fair, Balanced, Reality-Based, and More than Two-Handed Look at the World
J. Bradford DeLong, Department of Economics, U.C. Berkeley #3880, Berkeley, CA 94720-3880; 925 708 0467; delong@econ.berkeley.edu.
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August 26, 2005
Andrew Samwick Says: Don't Linger in this CAFE
Andrew Samwick gives a very good version of the economists' rant against the CAFE standards. I, too, was abashed to discover that my Subaru Legacy is an "SUV."
From Congress's point of view, CAFE is useful because it keeps people from thinking that Congress is taxing them. What CAFE does is to impose a tax on fuel-inefficient vehicles which is then rebated as a subsidy on fuel-efficient vehicles. This tax, however, is collected and then rebated by the auto manufacturers themselves--they reduce prices on fuel-efficient vehicles below what they would otherwise be in order to meet their CAFE targets, and m"
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