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A gem from today's Washington Post:

Drivers Feeling Shunned by D.C. - City Less Welcoming to Suburban Cars.

Oh, those poor suburban drivers who pay neither tolls nor taxes as they commute into and out of DC! How dare the city to which they contribute no taxes aim to stop their free-riding ways!

Thank god the Washington Post is there to stand up for the put-upon suburban car driver. Speak truth to power, WaPo! Go on!

Two items.

1. Thanks to higher gas prices, Americans really are driving less. I expected it to take years if not decades for this to happen. I was wrong.

2. I expected things to get much worse in Iraq this summer. I was wrong.

My apologies.

Longtime readers know that I'm skeptical that the rising price of gas will have much of an impact on the amount of driving most Americans do. The short version of my argument is that far too many of us have constructed lives based around driving - between home, work, the shopping mall, school, church, etc - for us to easily change. I'm beginning to have second thoughts, however, and Atrios' insight here is a perfect illustration of why:

During my peak driving life (from age 16-30 or so) the price of gas was basically not much more than a dollar per gallon for most of the time. Even in my relatively poor years, except for very long trips it was never a high enough price that I'd factor it in when considering to make a car trip. Sure I might grumble when it was time to fill the tank, but I never thought in terms of "how much will it cost me to make this trip."

At $4.50 per gallon in many places I guess that changes. If you're getting 20 mpg, a 50 mile round trip commute will cost you $11.25. The 13.2 mile trip from downtown Minneapolis to the airport, which you can do on the train for $1.50, costs 3 bucks by car.

The point I'm trying to make is that when gas was cheap, people thought in terms of the cost of filling the tank rather than the cost of making a trip. People didn't really make a marginal cost/benefit calculation because they didn't really perceive the cost for short trips. That's changing.

Duncan and I are the same age, and like him I did an enormous amount of driving from age 16 to 30. And he's right. Gas was so cheap that I didn't think much about it. When it went up I barely noticed, and when it went down it just meant I had more money to spend when I got to whatever was at the end of my road.

But in the last 2 years the price of gas has risen so quickly that my entire mindset has changed. Somewhere around the $3.50 mark I started thinking in terms of cost per trip, and not cost per tank, a shift that has made me question what I'm doing every time I get inside my car. And that's paradigm shift I hadn't considered when making my previous argument about the stickiness of our past decisions. I was thinking using old rules, unable to see how a new reality might force me to develop new perceptions.

A bunch of randomness for your Sunday afternoon....

+ An interesting tidbit from the Senate's Phase II Report on Pre-War Intelligence: Michael Ledeen, a neocon uber-hawk if ever there was one, apparently "unwittingly" aided in Iranian counterintelligence efforts. Given that Ledeen has spent the past 20 years claiming that we have been at war with Iran since 1979, that's really, really amusing.

+ The state of South Carolina has decided to start issuing "I Believe" personalized license plates to Christians who request them. Normally, I wouldn't actually think to much of this; most states have dozens and dozens of possible plates, providing an additional source of revenue that's collected voluntarily from citizens. But in this case, the state has decided to favor these plates over all of the others it offers: Rather than charge the usual $70, these will go for just $4. C'mon SC... set the price the same as the rest and you'll find most people won't care. Unless, of course, the point here really was to favor one religion over another. Nawh... couldn't be that, could it?

+ Ezra writes about the "political economy of infrastructure," pushing back against the idea that infrastructure gets underfunded because politicians are short-sighted. And he's right, there are some short term benefits that do indeed push politicians towards construction. But that just begs what I think is the real question: why are voters so short-sighted? If you could get citizens to see beyond this year or next, you might be able to convince them that mass transit programs require a large investment that produces an even bigger return. The problem isn't the members of congress; it's their constituents.

+ How bad are things looking for the GOP this fall? Go read this and you will begin to understand.

WiredNews:

The global airline industry is taking a beating these days -- it could lose as much as $6.1 billion this year -- and with airlines folding or going bankrupt at a rate of about one a week, it's begging everyone short of the skycaps to help it survive.

The situation is so dire the International Air Traffic Association issued a resolution on Monday at its annual meeting calling on the world's governments, airports and airline employees "to take immediate action to help the industry survive the growing financial crisis." Reading it, you can almost feel the panic enveloping an industry that turned a $5.6 billion profit last year.

"The airline industry is sending a clear message to governments, partners and labor," association CEO Giovanni Bisignani said. The association represents 230 airlines operating 94 percent of all international and cargo flights. "We are in crisis."

...Twenty-four airlines have gone under or gone bankrupt in the past six months. Aloha Airlines is gone. Slick all-business carrier Sliverjet just folded. Frontier is in bankruptcy. The rest of them are slashing and burning flights in a mad dash to save money as fewer people take to the air. American just canceled 10 percent of its schedule. Things are so bad that big financial analysts are urging investors to dump airline stocks as fast as they can - the Amex Airline Index fell 3.8 percent on Monday alone. It's no wonder IATA is looking for help -- and insisting it's not a bailout.

"We're not asking for money or for funding," says association spokesman Steve Lott. "All we're asking for is a level playing field where we get treated like everyone else."

No money or funding, just a "level playing field where we get treated like everyone else." OK, I'll bite... So does this mean US carriers will support opening the domestic US air travel market to foreign competition? Because right now, our market is closed and very tightly controlled. To compete in the US, carriers like Virgin are forced to create an entirely new company, rather than simply expanding into the domestic market through partnerships and route expansions. Its stupid, wasteful, inefficient, and unnecessarily protectionist.

Amazingly, the answer is a qualified yes:

The declaration also urges relaxation of cross-ownership rules, an issue primarily in the United States, where foreign carriers are not allowed to own more than 25 percent of a U.S. airline. Boyd doesn't think this would make much of a difference, saying, "Finding new people to pour their money down the drain isn't going to fix anything."

But of course the IATA has no say here. The Congress does. And I have a hard time imagining that members from Chicago and Dallas would be willing to open the door to foreign competition for American and United.

And what might be the motivation behind all this? The EU's new carbon trading scheme, of course:

The industry wants governments to "refrain from imposing multiple and additional punitive taxes and other measures that will only deepen the crisis." Lott says that point applies to myriad taxes and surcharges and the world's governments levy on the industry, but it appears squarely aimed at the EU and its plan to include airlines in its mandatory carbon trading scheme starting in 2012.

The airlines want to be exempted from the system, but doing so would be ridiculously short sighted. The older carriers may not like it, but to survive they are going to have to adapt, and if they don't, Richard Branson is going to eat their lunch. If I were them, I'd be more worried about him than about the EU.

As you read this, imagine how different our mass transit system would look, and by extension how different our country would look, if we had used the period of cheap energy in the 1980s and 1990s to gradually raise the gas tax to levels that impact individual behavior. Rather than having the nation shift all at once onto a mass transit system that is woefully underdeveloped, we could have gradually weaned ourselves from our dependence on cars. You know, like the rest of the advanced industrialized world...

DENVER -- With the price of gas approaching $4 a gallon, more commuters are abandoning their cars and taking the train or bus instead.

Mass transit systems around the country are seeing standing-room-only crowds on bus lines where seats were once easy to come by. Parking lots at many bus and light rail stations are suddenly overflowing, with commuters in some towns risking a ticket or tow by parking on nearby grassy areas and in vacant lots.

"In almost every transit system I talk to, we're seeing very high rates of growth the last few months," said William W. Millar, president of the American Public Transportation Association.

"It's very clear that a significant portion of the increase in transit use is directly caused by people who are looking for alternatives to paying $3.50 a gallon for gas."

Some cities with long-established public transit systems, like New York and Boston, have seen increases in ridership of 5 percent or more so far this year. But the biggest surges -- of 10 to 15 percent or more over last year -- are occurring in many metropolitan areas in the South and West where the driving culture is strongest and bus and rail lines are more limited.

Here in Denver, for example, ridership was up 8 percent in the first three months of the year compared with last year, despite a fare increase in January and a slowing economy, which usually means fewer commuters. Several routes on the system have reached capacity, particularly at rush hour, for the first time.

"We are at a tipping point," said Clarence W. Marsella, chief executive of the Denver Regional Transportation District, referring to gasoline prices.

Transit systems in metropolitan areas like Minneapolis, Seattle, Dallas-Fort Worth and San Francisco reported similar jumps. In cities like Houston, Nashville, Salt Lake City, and Charlotte, N.C., commuters in growing numbers are taking advantage of new bus and train lines built or expanded in the last few years. The American Public Transportation Association reports that localities with fewer than 100,000 people have also experienced large increases in bus ridership.

In New York, the Metropolitan Transportation Authority reports that ridership was up the first three months of the year by more than 5 percent on the Long Island Rail Road and the Metro-North Railroad, while M.T.A. bus ridership was up 10.9 percent. New York City subway use was up 6.8 percent for January and February. Ridership on New Jersey Transit trains was up more than 5 percent for the first three months of the year.

The increase in transit use coincides with other signs that American motorists are beginning to change their driving habits, including buying smaller vehicles. The Energy Department recently predicted that Americans would consume slightly less gasoline this year than last -- for the first yearly decline since 1991.

Oil prices broke yet another record on Friday, climbing $2.27, to $125.96 a barrel. The national average for regular unleaded gasoline reached $3.67 a gallon, up from $3.04 a year ago, according to AAA.

But meeting the greater demand for mass transit is proving difficult. The cost of fuel and power for public transportation is about three times that of four years ago, and the slowing economy means local sales tax receipts are down, so there is less money available for transit services. Higher steel prices are making planned expansions more expensive.

Typically, mass transit systems rely on fares to cover about a third of their costs, so they depend on sales taxes and other government funding. Few states use gas tax revenue for mass transit.

In Denver, transportation officials expected to pay $2.62 a gallon for diesel this year, but they are now paying $3.20. Every penny increase costs the Denver Regional Transportation District an extra $100,000 a year. And it is bracing for a $19 million shortfall in sales taxes this year from original projections.

"I'd like to put more buses on the street," Mr. Marsella said. "I can't expand service as much as I'd like to."

Average annual growth from sales tax revenue for the Bay Area Rapid Transit District, a rail service that connects San Francisco with Oakland, has been 4.5 percent over the last 15 years. It expects that to fall to 2 percent this year, and electricity costs are rising.

UPDATE: The Internet's Matthew Yglesias comments:

What happens next? What really shouldn't happen is for politicians to run around talking as if expensive gasoline is a temporary phenomenon. Responsible leaders will tell people that prices will fluctuate, but that as long as the Chinese and Indian economies keep growing, the general trajectory will be upward. Then they should sympathize with people who would like to take transit, but find it prohibitively inconvenient and with people who've just started taking transit and are finding it annoying and they should commit to making transit better and more available.

Alternatively, you could act like southern Florida and propose steep service reductions on your commuter rail system. But that'd be crazy. Jurisdictions with existing commuter rail lines need to make service more frequent. With transit, you can get into good equilibria and bad equilibria. On the good path, you have tons and tons of people who want to ride your line and as a result service is very frequent so as to accommodate all the traffic. And because service is so frequent, lots of people find the line convenient to use. On the bad path, infrequent service leads to low ridership which leads to infrequent service which leads to low ridership.

The idea of multiple equilibrium points is key here. Far too often, critics of mass transit point to low ridership numbers and conclude that people simply aren't interested in taking mass transit. But of course that's not necessarily what those numbers mean at all. Without any more information, the most you can say is that they do not want to take mass transit as it is currently configured. Make it more frequent, more convenient, more pleasant to use, and more cost effective, and its entirely possible that you would see a huge surge in use. Over the past few months, we've seen only one of those 4 things shift, and already people are beginning to change their behavior.

Greg Mankiw passes along this gem from the Washington Times:

John McCain, the presumptive Republican presidential nominee who should know better, was the first presidential candidate to endorse the gas-tax holiday for the summer driving season. Reportedly, the idea originated with a political pollster, not among Mr. McCain's economic advisers.

Such a straight talker that John McCain! He tells you like his pollsters tell him it is! Never mind the facts - if you want to hear it, he'll tell you! So bold! So different!

UPDATE: And while we are on the subject of gas tax economics, today's effort from Paul Krugman is really quite sad. I'll let Peter Dorman explain:

(Krugman) argues that, unlike the differences between Obama's and Clinton's health care plans, their split on gas taxes is minor stuff. Economists are miffed at HC because tax incidence is their lamppost, says Paul, but what to do about high oil prices is second order.

He's got to be kidding.

The best that can be said for the gas tax holiday is that, in its Clintonoid version, it is nearly pointless. A few cents per gallon get shifted from federal taxes to oil companies, since price at the pump is largely governed by demand, and then they get shifted back to the government with Hillary's windfall oil profits tax. It is a big, meaningless shuffle that sells itself as populism. Since the dollars more or less end up in the same pockets they start out in, you might say Krugman is right.

But this is not why the vast majority of economists are perturbed. Yes, there is a matter of professional pride at stake, but it is more justified than Krugman is willing to admit. Clinton's proposal, featured in her latest round of TV ads, is transparently dishonest: it promises something she and every reasonably well-informed observer knows to be false. The appropriate analogy is not to disagreements on trade, which Krugman brings up, but to supply-side snake oil, the claim (which McCain seems to be embracing) that cutting taxes raises revenues. The issue is not good versus bad policy, but honesty versus dishonesty. Economists are trained to see the cynicism behind such ploys, and they do a service to call attention to it.

But there is an even bigger issue lurking just beneath the surface. Without a doubt, one of the biggest challenges all of us, in the US and around the world, will face during the coming years is the increasing scarcity and rising price of oil. We will experience this as a threat to our living standards, a barrier to global rebalancing (getting the US trade deficit under control), and perhaps even a trigger for catastrophic military confrontation. (For a blast of sanity on this last point, see Michael Klare.) At the same time, the imperative of reducing carbon emissions will require us to wean ourselves from oil even faster than market forces alone would dictate.

Of course, no rational politician will tell us how he or she plans to get us out of the era of cheap oil. Any discussion of politics has to take place against a backdrop of cowardice and insincerity. That means we have to read the tea leaves, like the current dustup over whether to suspend gas taxes. So what does this "unimportant" proposal say about Clinton's plans for a future oil policy? Taken at face value--and how else should we take it?--it suggests that she will delay measures to reign in demand or even try to subsidize fuel consumption for short term political advantage. Unless this election-year idea is just a charade, it portends a phony populism that places our well-being, and possibly our survival, at even greater risk.

And that's the point: either she's serious, in which case she is well beyond clueless in one of the most crucial policy areas imaginable, or she is blatantly pandering, manipulating the ignorance of voters to her own personal benefit. Either are inexcusable. And yet Krugman excuses them nonetheless.

C'mon Paul - Hillary has said she has no respect for economists. You are one of the brightest economists of your generation. How can you possibly continue to support someone who has so brazenly dismissed your life's work?

UPDATE: Mark Thoma:

To me, the claims being made about this proposal are the same as saying tax cuts pay for themselves. Even if it has popular appeal, even if it wins votes and elections, economists are in wide agreement in saying that the proposal is misleading as stated by the campaign, and generally a bad idea. When literally all the experts around you are telling you that what you are saying is misleading (at best), yet you declare you are going to say it anyway, that's no better than the Laffer curve stuff. Sure, it's not much money, but what if this were attacking Iran instead and she declared she was just going to do it anyway? That's a bigger deal, and refusing to listen to experts - dismissing them as out of touch and elitist - tells us something important...

The point here is that this is a lousy way to help people. It's not that we don't care, or don't understand, it's that we do care and understand all to well and we'd like to see policies put into place that actually have a chance to help people. Promising things that aren't likely to happen - telling people they will get relief when it will likely be a pittance (the $70 figure they cite is not supported by the underlying economics) - simply leads to disappointment and disenchantment with politicians. All we are asking is that promises have a chance to be realized. Let's help the people who need help, but let's do it in a way that is effective rather than in a way that plays off their difficulties and fears, but does not really address their needs.

One of the hallmarks of progressivism, at least in its 20th century version, was the belief that expert opinion could be enlisted to better the lives of average citizens. Current progressives have a much more realistic understanding of things than their forbearers once did, but nevertheless the belief that education, training and expertise matter is still there. Unless you are Hillary Clinton and you need to win an election, I guess.

Remind me why we should consider her to be a progressive again?

UPDATE II: Looks like all the big guns are in on this one. Greg Mankiw:

Paul Krugman thinks all of the fuss about the gas tax holiday has become a bit hysterical. He agrees that the policy is a bad idea, but it is no big deal, so let's not focus on it.

Paul is right that the issue is, quantitatively, small potatoes, but I am nonetheless pleased to see it get so much attention. This issue is like the canary in the coal mine: No one really cares about the canary, but its condition tells us about deeper problems that lie below.

Many economic issues (e.g., health care, corporate taxation, the trade deficit) are vastly complicated, with experts holding a variety of opinions. When candidates disagree, it simply means that each is siding with a different set of experts, and it is hard for laymen to figure out which set of experts is right. By contrast, the gas tax holiday is not nearly as complicated, and the experts speak with one voice.

Why, then, are candidates proposing the holiday? I can think of three hypotheses:

Ignorance: They don't know that the consensus of experts is opposed.

Hubris: They know the experts are opposed, but they think they know better.

Mendacity with a dash of condescension: They know the experts are opposed, and they secretly agree, but they think they can win some votes by pulling the wool over the eyes of an ill-informed electorate.

So which of these three hypotheses is right? I don't know, but whichever it is, it says a lot about the character of the candidates.

Is there any doubt that with Clinton it is choice #3?