So, You Got Recalled: 6 Lessons from the Gas Tax Backlash

This past Tuesday, voters in the California Inland Empire were so upset with State Senator Josh Newman that they fired him two years before he was up for re-election. What caused their anger? 14 months earlier, Newman voted to raise taxes and fees on transportation fuels to fund various infrastructure programs, such as road repairs.

What’s the lesson from this?

One take argues that progressives should be wary of pursuing policy programs that include tax hikes, because they create a political backlash.

A reasonable take, but not quite right. Or at least, a take that I can see being interpreted to lead to the conclusion that efforts to raise taxes are politically misguided.

So, I believe there are six lessons from the Newman recall over raising the gas tax.

1. Don’t overstate the backlash. While Newman got fired by his voters, 80 other Democrats in the CA legislature voted for the same bill (SB-1) and were not recalled. In fact, the 2018 primaries marked yet another year for the CA’s continued movement toward Democrats, making it one of the most Dem-dominated states in the nation — despite Dems raising taxes in 2009, 2012, and twice in 2016.

2. Institutional rules matter & Prop 13 is The Worst.Why did 80 Democrats (out of 82 total) vote for SB-1, when a simple majority would require only 62 Democrats? The answer is Proposition 13, which — among many other terrible things — requires all tax increases to get a two-thirds supermajority in the each branch of the CA Legislature. Without Prop 13, Democrats could have enacted SB-1 and given passes to their 20 most vulnerable members (Newman was the #1 most vulnerable). Some progressives in CA are pushing Prop 13 reform around its commercial tax parts, but the Newman recall suggests they should also try to get rid of the two-thirds vote requirement.

3. Political power is a means to an end, not an end itself. Don’t forget the purpose of this whole politics thing is to do as much good stuff as possible while in power — not to avoid backlashes and keep power for its own sake. More specifically, given the number of serious problems that can only be addressed through public policy, bold programs are needed — urgently, in fact.

4. Bold policy programs come with risk.In pursuing those bold policy programs, the goal is to minimize political risk where possible, not avoid it all together. A low-to-no-risk policy program is a program with little material upside.

5. For some problems, the boldest solutions don’t even need taxes. The Newman recall over raising the gas tax may suggest for climate policy that “keep it in the ground!” policies are a much better approach (both for political and policy reasons) than policies that regressively and directly raise the price of fuel. The wonk class loves climate policies that drive down the use of dirty energy by raising their prices so they include their “negative externalities,” but the politics and efficacy of such approaches are questionable. David Roberts has a great piece at Vox that explains this reasoning, which you should check out.

6. You can be bold and still be strategic. To minimize a policy program’s potential for causing political backlash relative to its ability to materially improve the lives of the public, the program should:

• Pursue progressive instead of regressive taxes. Gas taxes are regressive, impact much of the population, and can severely tighten families’ budgets. Taxes on high-income earners and corporations are much more popular and don’t lead to successful recall campaigns. Progressive taxes raise revenue from the people who already have too much of it and use it to do bad things. Low-and-middle-income families are right to get upset when they have to pay an ever-greater share for society’s necessities, while the rich continue to plunder.

• Tie progressive taxes with universal benefits. Those popular progressive taxes are even more popular when they are used to fund things like public education or health care. The benefits from taxes should be as clear and universal as possible, so everyone knows they are benefiting. Many of our current benefits are hidden — and thus not appreciated by the public — or are means-tested — and thus, by design, only benefit a select few, making them vulnerable to the politics of resentment.

• Increase deficits, not just taxes (at the federal level). While regressive taxes sometimes cause a backlash among the public, deficits only cause backlashes among the elite political class that the public already despises. Deficits that are too low weaken the economy by wasting its real resources that could otherwise be used to produce more economic output.