Social Econ Blog

Republican, Democratic, conservative, and liberal economists all agree gas tax holiday is stupid:

A gas tax holiday proposed by U.S. presidential hopefuls John McCain and Hillary Clinton is viewed as a bad idea by many economists and has drawn unexpected support for Clinton rival Barack Obama, who also is opposed.

"Score one for Obama," wrote Greg Mankiw, a former chairman of President George W. Bush's Council of Economic Advisers. "In light of the side effects associated with driving ... gasoline taxes should be higher than they are, not lower."

Update -- to point out how really absurd this discussion is, even if you assume that the entire that consumers receive the entire benefit of the tax cut, the savings will be trivial. For gas sipping vehicles like mine -- maybe $12, for gas guzzlers maybe twice that.

More from Newsweek:

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.

Why is this gas pander so bad? Let me count the ways:

* It's a direct transfer of money from motorists to oil companies, which are getting ready this week to again report record obscene profits. If the federal excise tax were lifted, oil companies would simply raise prices and pocket most of the difference. Clinton's proposal to recover the money with a windfall profits tax on oil companies sounds nice but won't happen. That tax was easily blocked by the Senate in December and would likely be blocked again.

* It offers taxpayers only peanuts. The Congressional Budget Office says the average savings to motorists this summer would be a total of $30. Did I miss something, or was that measly number somehow not included in Clinton's explanation of her support?

* It sends more hard-earned money to the Middle East, which is terrible for our national security. Remember, 15 of the 19 terrorists on 9/11 came from Saudi Arabia. How did they get the terrorist training? The madrassa indoctrination? Oil money.

* It worsens global warming by encouraging gasoline consumption. When you flee your house in 2020 because of flooding, remember which politicians pandered.

* It makes it more likely you'll have a car accident or will waste even more time in traffic. The proceeds from the gas tax go for highway construction and upgrades. Because the tax (24.4 cents a gallon on diesel fuel) was last raised 15 years ago, our infrastructure is a mess, with potholes and dangerous crossings practically everywhere. Thousands of repair projects will be further delayed.

* It will cost 300,000 construction jobs, according to the Department of Transportation. Makes it kind of ironic when Clinton starts her rallies saying she wants "jobs, jobs, jobs."

* It will cost the U.S. Treasury at least $8.5 billion and probably much more, according to state highway officials. For McCain that's no money at all—merely one month in Iraq. For Clinton it's money she's already spent. She has said in the past that any proceeds from a windfall profits tax would go for renewable energy. The $8.5 billion figure assumes the tax would be reapplied after Labor Day. Fat chance. The one-year costs are probably closer to $30 billion.

* It won't happen anyway because Congress isn't usually quite that stupid, and if it is, President Bush would veto the bill.

So why are McCain and Clinton doing this? Because when they learned that Obama had supported a similar suspension of the Illinois gas tax in Springfield, Ill., before realizing it was a bad idea, they saw an opening. It was like Hillary's whiskey shot in the bar, only sleazier. Try to show that the guy just doesn't get it.

Of course, McCain and Clinton do get it. They get that people are hurting and want some relief, even if this form of it makes no sense. They get that voters have been conned into believing that both candidates are responsible public servants because they're not as bad as some others, so they can trade on that reputation. They get that smacking Obama is more important than anything else on the planet right now, and that for Obama to respond by calling them panderers will take Obama about as far as it took Paul Tsongas in 1992 when he leveled the same charge at Bill Clinton.

In sum, McCain and Clinton get that the media will let them get away with this. You can't forgive them on this one, Lord, for they know exactly what they do.