Gas Tax Pandering
It seems a fair number of people are getting into the game of bashing McCain and Clinton for trying to pick up some short-term political points by calling for a temporary suspension of a gas tax. Even perpetual Obama-basher Paul Krugman is willing to give Obama some props for opposing it. He also gives a simple explanation for why it won't help those who actually need the help:
Why doesn’t cutting the gas tax this summer make sense? It’s Econ 101 tax incidence theory: if the supply of a good is more or less unresponsive to the price, the price to consumers will always rise until the quantity demanded falls to match the quantity supplied. Cut taxes, and all that happens is that the pretax price rises by the same amount. The McCain gas tax plan is a giveaway to oil companies, disguised as a gift to consumers.
Is the supply of gasoline really fixed? For this coming summer, it is. Refineries normally run flat out in the summer, the season of peak driving. Any elasticity in the supply comes earlier in the year, when refiners decide how much to put in inventories. The McCain/Clinton gas tax proposal comes too late for that. So it’s Econ 101: the tax cut really goes to the oil companies.
Krugman's colleague at the Times makes a bit more of the so-called tax plan as it relates to the US's non-existant energy policy, and has a rather pithy way of pointing out it's ultimate effect.
When the summer is over, we will have increased our debt to China, increased our transfer of wealth to Saudi Arabia and increased our contribution to global warming for our kids to inherit.
. . .
The McCain-Clinton gas holiday proposal is a perfect example of what energy expert Peter Schwartz of Global Business Network describes as the true American energy policy today: “Maximize demand, minimize supply and buy the rest from the people who hate us the most.”
Neither of them are as blunt or as pissed off as Jonathan Alter at Newsweek, though.
Hillary Clinton has now joined John McCain in proposing the most irresponsible policy idea of the year—an idea that actually could aid the terrorists. What's worse, both of them know that suspending the federal gas tax this summer is a terrible pander, and yet they're pushing it anyway for crass political advantage.
Clinton and McCain have learned a destructive lesson from the Bush era: as Bill Clinton said in 2002, it's better politically to be "strong and wrong" than thoughtful and right. The goal is to depict Barack Obama as an out-of-touch elitist. By any means necessary.
I could highlight a long debate among economists on suspending the gas tax, but there is no debate. Not one respectable economist—and not one environmentalist or foreign policy expert—supports the idea, unless they are official members of the Clinton or McCain campaigns (and even some of them privately oppose it). To relieve suffering at the pump, send another rebate check or provide tax credits or something else, but not this.
His list of reasons why the idea is so bad is rather impressive, and worth the read.
The whole point that people are truly hurting and truly do need help with rising costs is what makes this all so sad. McCain and Clinton are willing to give out false hope to score political points and Obama is left making the proper choice and will likely get hammered for it. If you ever wonder why elections always seem to come down to choosing between bad and worse, this whole, "let's bribe the American public with the false hope that they may get to keep two or three dollars more a week in their pocket", is an excellent example in microcosm. Where policy gimmicks mean more than real effort or real solutions.
