NEWS ARTICLES 1

Candidates for governor wielded divergent views on Maryland's looming gas tax hike like a cudgel this week, seeking to score points with voters ahead of a July primary while those in a position to bring relief stood by.

The 18 percent increase, scheduled to automatically occur in July, divided the crowded Democratic field as Republican candidates capitalized on economic discontent. That's a strategy that political experts noted smoothed a path to victory in two elections for Republican Gov. Larry Hogan in a deeply Democratic state.

"This is already shaping up to be a bad year for Democrats. This is an issue tailor-made for Republicans running in Maryland," said Todd Eberly, a political scientist at St. Mary's College.

Hogan's lack of action has candidates jostling to frame what leaders should or could have done differently. The term-limited governor has suggested that a Democratic state official, who has been his ally in the past but is now one of the candidates to succeed him, should use his power to help motorists even though state lawyers say that's not legally permitted.

Ahead of the July 19 primary, some gubernatorial candidates called for the increase to be halted for six months or a year. Others pitched another gas tax holiday that would suspend the state's gas tax altogether, which is set to increase from 36.1 cents per gallon to 42.7 cents.

For all the candidates' positioning, however, Maryland's political leaders intend to let the increases take effect, saying the state's transportation infrastructure cannot afford to lose the $200 million that the increase will generate in the next year.

The tax increase, which is automatically adjusted based on the consumer price index every July, often goes unnoticed. But with inflation at a 40-year high, this year's increase translates into a 6.6-cent jump at a time when prices have already been shattering records for months.

For an average sedan's 12-gallon tank, the increase amounts to an extra 79 cents per fill-up.

"There's a huge difference between the actual dollar cost and the political cost," Eberly said. "And the political cost of seeming indifferent is pretty substantial."

Hogan on Monday announced the new rate and challenged his former political ally Comptroller Peter Franchot, a leading Democratic contender to succeed him, to find a way to stave it off. Franchot, the state's tax collector, lacks the authority to do that, Maryland's attorney general said this week.

"This tax increase, while hardship-inducing for Marylanders at any time, is simply unconscionable," Hogan wrote, telling Franchot: "It is my hope that you will use every legal and regulatory power at your disposal to halt or minimize the impact of the accelerating gas taxes."

He asked the comptroller to stop collecting the tax and waive penalties for people who refuse to pay. The comptroller's office said he doesn't have authority to do it and it would do little to drive down prices because those taxes would eventually come due.

"Simply put, if I was legally able to prevent the motor fuel tax increase from going into effect, I would have done so already," Franchot wrote in a letter Tuesday that asked state legislative leaders to vote to forestall the increase instead.

He asked Hogan and presiding officers to convene a special session to vote on it next week, on June 1. The House Republican Caucus, which unsuccessfully pushed a bill this spring to stave off the increase, sent a letter making the same request.

Hogan has not responded, and the legislature's presiding officers declined.

"We cannot have a reliable transportation network that regularly experiences failing conditions due to insufficient funding and deferred maintenance," House Speaker Adrienne A. Jones (D-Baltimore County) and Senate President Bill Ferguson (D-Baltimore City) said in a joint statement.

"The problem is not the marginal impact of $0.06 inflation adjustment to the wholesale gas tax. The problem is big oil companies exploiting global uncertainty to drive the price of gas to more than $4 a gallon."

The episode, however, created another opportunity for Hogan's handpicked candidate to succeed him, former commerce secretary Kelly Schulz, to draw attention to her ads and a social media blitz about Democratic inaction on gas prices.

She has taken a page from the governor's playbook, whose upset 2014 victory in deep-blue Maryland was built on cleverly phrased attacks on taxes such as "the rain tax."

Schulz labeled this increase "The Inflation Tax."

"I won't be afraid to fight for hard-working Marylanders," she wrote on Facebook this week, saying: "Comptroller Franchot is shirking his responsibility." She added in a video that she would repeal it if elected, "just like the governor repealed the rain tax the first year that he was in office."

Schulz's chief Republican opponent, Del. Dan Cox, said on Facebook on Wednesday that if elected he would use executive power to immediately suspend the gas tax, though it was not immediately clear if the governor has authority to do that.

Economists say repealing the tax would have larger consequences, even if voters who can expect to feel higher prices for the rest of year see it differently.

Anirban Basu, an economist and CEO of the Sage Policy Group, said gas prices have an outsize psychological impact on how people view inflation but that there's actually very little state officials can do to meaningfully change them.

A winning political strategy might be to forgo the increase and suspend the gas tax altogether, he said, but "if I was trying to give advice based on what I think is good public policy, I would say let the gas tax increase transpire. We need the revenue for infrastructure, and it's good if people start driving less."

The competitive and crowded Democratic field for governor is divided on whether to adjust gas taxes.

John B. King Jr., a former education secretary under President Barack Obama, for example, said focusing on a reprieve is shortsighted when leaders should be swiftly reducing dependence on fossil fuels. Lifting the tax would not save individual drivers much money but would strip cash from public works projects, he said.

But three other Democrats backed at least staving off the increase, arguing that voters need immediate relief. Wes Moore, an author and former nonprofit chief; Jon Baron, a former federal appointee and nonprofit chief; and Tom Perez, a former labor secretary under Obama, each backed a delay in the tax hike. Perez added that he supported targeted relief to the hike that would help mass transit users, too.

Other Democratic candidates, including Ashwani Jain and two others, went further, pushing for the tax to be suspended altogether.

Rushern Baker, the former Prince George's County executive, and Doug Gansler, the former state attorney general, each used the jousting between Hogan and Franchot to suggest they would act where others would not.

"The people with the ability to provide relief are just finger-pointing while people are paying an arm and leg just to get to work in the morning," Baker said. "Voters need to know that they are voting for someone with the will act when things get tough."

Gansler backed the idea of using executive power to suspend the gas tax: "Marylanders need relief at the pump, and they are tired of this bickering and dithering."

Some motorists say they would welcome the relief.

"It's terrible," William Obioha, 19, said as he leaned on his Subaru Legacy at a Sunoco gas station in Silver Spring this week, where gas was going for $4.90 a gallon. Obioha said he stopped working as a driver for Door Dash a month ago because high gas prices were cutting into his profits and making it untenable.

Obioha said he doesn't pay attention much to politics, but "all I want is the gas to go down."

NEWS ARTICLES 2

Federal policy makers should consider a temporary gasoline-tax holiday to ease the burden of soaring fuel prices, Treasury Secretary Janet Yellen said on Sunday.

"Gas prices have risen a great deal and it's clearly burdening households," she said on ABC's "This Week." "That's an idea that's certainly worth considering."

Ms. Yellen's comments come as several states, including Connecticut and Maryland, have completed plans to temporarily halt gasoline taxes at the state level. But in the U.S. Congress, Democratic-led efforts to temporarily stop collecting the federal gasoline tax of 18.4 cents a gallon have yet to gain traction.

Across the world, fuel prices have surged following Russia's invasion of Ukraine, which disrupted the global oil market. Rising oil prices along with increased demand as the summer driving season kicks off have driven the average cost of a gallon of unleaded fuel in the U.S. to $4.98 on Sunday, according to AAA. That is up from about $3 a year ago.

Coalitions of construction and business interests and labor groups say gasoline-tax decreases don't necessarily lead to consumer relief since they don't prevent retailers from raising base pricesand may encourage them to do so. They also say state and federal gasoline-tax decreases could jeopardize much-needed road and bridge improvements, including projects to be funded by last year's $1 trillion bipartisan infrastructure law.

Harvard University's Lawrence Summers, a former Treasury secretary, criticized the idea on Sunday as a "gimmick...you eventually have to reverse," speaking on NBC's "Meet the Press." Meaningful steps to address inflation, he said, would include lowering drug prices by giving Medicare the power to negotiate with pharmaceutical companies.

Medicare is a federal health insurance program for people who are 65 and older or have specific disabilities

Brian Deese, who heads the White House's National Economic Council, listed several items the administration is targeting to fight inflation prescription drug prices, utility costs, tax reform, semiconductor supply, Chinese tariffsbut didn't mention a federal gasoline tax holiday.

"Prices are unacceptably high right now and that's why the president has said we need to make this our top economic focus," he said on CBS' "Face the Nation."

The gasoline-tax issue cuts across traditional partisan politics, with both Republicans and Democrats at the state level supporting various relief measures.

In the U.S. House and Senate, however, Republican leaders largely oppose suspending the federal gasoline tax. Senate Minority Leader Mitch McConnell (R., Ky.) has accused Democrats of playing "political games," noting that any gasoline-tax relief would expire soon after midterm election

NEWS ARTICLES 3

The Biden administration lobbies for renewable energy funding programs that nominally support the U.S. solar industry. However, I sit on the boards of four solar energy companies that are being harmed badly by existing U.S. tariffs and threats of new ones. Two of those companies are suffering through serious financial problems, and three are refocusing on Europe, Asia and Australia, where the solar markets are growing rapidly and suffer less from government interference.

How did the U.S., where silicon solar panels were invented, get to this point? In 2001 Silicon Valley's SunPower Corp. created a compelling vision of the solar future by developing the cells covering the wings of NASA's Helios solar-powered airplane with a 247-foot wingspan. Yet, SunPower almost went bankrupt that year in the dot-com crash. The problem wasand remainsmanufacturing cost. According to SunPower founder, Dick Swanson, NASA's price target for SunPower's advanced solar cells was $60 per watt of power produced. That's literally 375 times the market price of solar cells today.

My company, Cypress Semiconductor, was an expert in cost reduction. We invested heavily in SunPower, convinced its management to shut down an old Silicon Valley wafer-fabrication plant and sent its R&D team to a "Moore's Law Boot Camp" at our plant in Texas. After SunPower's engineers spent months creating blueprints for the automated plant and equipment to achieve competitive cost, they turned down my offer to give them our wafer-fabrication plant because it wasn't economically viable, even at zero cost.

To win, SunPower had to do exactly what U.S. chip companies had to do with their cost-sensitive chip assembly factories in the 1970sfirst automate them, and then put them in low-cost countries. SunPower's new plant was built in the Philippines. The Chinese solar industry followed suit and created multiple generations of automated solar-cell lines that eventually drove the price of utility-grade solar panels down to a record-low 27 cents per watt by 2020. As a result, 5 of the 6 U.S. solar wafer manufacturing plants operating in 2009 shut down by 2013, according to Clean Energy Associates. These shutdowns led to a punitive 2012 tariff levied by the U.S. Commerce Department.

Those manufacturing jobsgovernment subsidized or notwill never come back to the U.S. And we shouldn't invest to bring them back either, because they can pay workers only about $2 an hour to remain viable, even when they are automated.

Today, the Chinese solar industry stretches from high-purity sand mines in the Inner Mongolia Autonomous Region to the mega-factories that produced 30 billion silicon solar cells for $1.05 each in 2021. By contrast, in my "free" silicon plant in Texas, it cost $10 just to deposit a single layer of metal on a wafer. China also built massive glass and aluminum plants to produce the window-sized, antireflective tempered glass panels and aluminum frames. One of my companies wants to build a U.S.-based panel-lamination plant for logistics reasons, but the government hampers that effort by subjecting the importation of glass and aluminum frames to another 2018-vintage tariff.

Silicon Valley prospers because it invents and then moves on quickly from yesterday's technologies, such as the assembly of personal computers and cellphones. My next-generation solar technology companies are Enphase Energy (solar power electronics and storage), FTC Solar (utility-scale solar trackers), SunDensity (solar quantum concentrators) and Solaria Solar (complete residential solar and storage systems). All these companies enjoyed the benefits of cheap Chinese solar panels because low prices drove higher sales volumeas Adam Smith and David Ricardo would have predicted.

Clean Energy Associates reports that for every $0.35 per watt the American consumer paid in 2021 for Chinese solar panels, the U.S. solar industry collected another $2.30 per watt to mount them on houses, convert their erratic DC current to grid-legal AC current, and hook them up via the "internet of things" to the sophisticated Network Operation Centers that monitor the performance of millions of American solar systems.

The U.S. residential solar industry thus took in 87% of American residential solar revenue in 2021 by creating the value-added solar technology and service jobs that replaced minimum-wage factory solar jobs. This favorable trend survived Washington's creation of 25% to 250% tariffs on Chinese solar panels in 2012, the year heavily subsidized solar darling, Solyndra, went bankrupt after installing its solar collectors on the Obama White House.

So, what is the Commerce Department doing to preserve America's hard-won, disproportionately large share of the American residential solar market? In 2021 it opened a new investigation to determine if the Chinese are circumventing the 2012 tariffs, again with threats of draconian, retroactive tariffs that will disproportionately harm the U.S. solar industry and threaten 100,000 of the 230,000 American jobs, according to a Solar Energy Industry Association survey. The threatened jobs are mostly those of local installers spread out all over the U.S. As Ronald Reagan said, "The nine most terrifying words in the English language are 'I'm from the government, and I'm here to help.' "

Last year some members of the American solar industry alleged harm by the Chinese module industry and anonymously petitioned Commerce for added tariffs on Chinese solar cells and panels. That's right, they wanted the government to trash their competitors without having to disclose their names. When that gambit failed, a new petition was submitted this year by Auxin Solar, a tiny San Jose, Calif., company that laminates solar panels, but doesn't even make solar cells.

Even if the Auxin tariff petition fails, as I believe it should, the mere threat of new retroactive 50% to 250% tariffs has already caused several of the Chinese giantsLongi, Trina and Jinkoto stop shipping to the U.S. market, shutting down or delaying 83% of U.S. utility solar deployments being worked on by Austin's FTC Solar, according to CEO Sean Hunkler. We expect no relief for the rest of the year given the Commerce Department's yearlong decision-making process. Meantime, the Chinese solar panel companies still shipping to American residential markets have raised their prices in the last year over 70%, from $0.35 to $0.60 per watt, forcing U.S. consumers in effect to prepay the threatened new tariff.

Our politicians disingenuously campaign for conversion to solar energy, but their propensity for top-down economic controls is forcing American homeowners to pay $2.65 per watt on average to install a residential solar system today, according to Clean Energy Associates. The equivalent fully installed residential solar costs are $1.50 in Europe, $1.25 in Australia and $1 in Indiabecause these places practice, and get the benefits of, free-market capitalism in their solar markets.

By the way, the federal government pays a tax credit of 26% of the price of a new solar system installed by U.S. residential customers. A pro rata portion of that subsidy goes, via higher prices, to the very Chinese panel makers on whom Washington places tariffs.

Mr. Rodgers was founding CEO of Cypress Semiconductor Corp and chairman of SunPower Corp. at its IPO.

Tariffs on China Throw Shade on the U.S. Solar Industry

References

Cox, E. (2022). Surging gas taxes is expected to be a political weapon in Maryland politics.

Ackerman, A. (2022). Gasoline Tax Holiday 'Worth Considering,' Yellen Says; Treasury secretary says high fuel prices are a burden for U.S. consumers, but others say cutting the tax doesn't necessarily offer consumer relief. Wall Street Journal (Online)

Rodgers, T. J. (2022, May 24). Tariffs on China Throw Shade on the U.S. Solar Industry; Intended to punish Chinese panel makers, the import taxes are crushing U.S. companies and consumers. Wall Street Journal (Online)

QUESTIONS

Using the news article above that discusses the economic concept (taxes and consumer or producer surplus) 1. Abstract - the short description of the concepts, problems, questions discussed 2. Introduction 3. Literature Review - please compare and contrast the opinions of the authors of the articles, and present the important information, data, and statistics to support your conclusions. It is important that the Literature review is written in your own words with small quotes from the article. All quotes must have references in accordance with the 7th Edition APA Style. 4. Discussion - analyze the issue described in the articles using the economic concepts and theory learned in this class. The articles you chose may not use these exact terms; therefore, it is incumbent upon you to convert the article language into economic language as is appropriate. Include at least one graph in it

5. Conclusion