While the Federal Government is struggling to come up with a magical formulae to get the country back to work the solution may be as close as our nearest convenience store.  While it is not the one and only thing to stimulate the economy, the price of gas at the pump can be major support factor in turning the economy around.

In the early 1980 the unemployment situation in the country was in dire straights.  Then two things happened.  First the price of oil dropped like a rock  and secondly Detroit began offering cars with loans that were extremely low for the time.  Auto sales jumped, Detroit began hiring, consumer confidence increased, people began buying goods and services, companies started hiring and the natural progression of economic growth set in.  While this was going on our gas prices dropped and prompted America to began traveling and spending.

In todays economy the auto industry was been in a major marketing mind-set for years so we now expect these low rates and deep cost cuts.  It is the norm and not the exception.  There is little that Detroit can do to provide a stimulus that will aid in turning around the perception that everything is getting better this the economy.  On the other hand pump prices could play a big part in our recovery.  My prediction is that when gas prices hit $3.25 a gallon, we will start to see Americans start to feel a little better about the economy.  Consumer confidence at a very low point at this time and it is consumer confidence that will trigger the growth that we need.  Perception is everything.  We will  see America back on the road and thus  spending money at and away from home.  Consumer confidence will take a shot upward and will thus prompt Americans to spend; and spending is the secret to getting out of our economic turmoil.

Now do we artificially mandate from Washington that gas prices drop.  Do we force the oil companies to drop their prices.  Absolutely not,  we let the free market perform this task and this has been slowly happening over the last few months.  But is there any way to get the prices to drop quicker and the answer is “yes”. We have a large Federal and State tax base on fuel sold at the pump.  I would propose that we reduce, not eliminate, the taxes at the pump for six months.  If the plan works, we extend it for another six months but no more than that.  Then we gradually increase the taxes over a second year and bring them back to where they are today with the understanding that much of these taxes go to rebuild our roads and bridges.

Will this end the economic problems that face us today.  Absolutely not, it is too complex for one solution to bring prosperity to the greatest country in the world.  What it is, is an sid to putting together one part of the puzzle that must be totally assembled to rebuild our great country.

 

 

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