Barack Obama is drawing praise from environmentalists and economists for opposing the McCain-Clinton proposal to suspend the 18.5 cent per gallon federal gas tax for the summer.
“It’s a gimmick,” Obama told voters in North Carolina. “This isn’t an idea designed to get you through the summer, it’s designed to get them through an election.
Obama has said the tax holiday would save a typical American motorist no more than $28, and likely less according to economists because cheaper gas would increase demand and push up the price, putting more profit into the coffers of the oil companies. “What working families need right now (is) not more of the same Washington gimmicks that are out of touch with the struggles of working Americans, but real change that will make a real difference in their lives,” Obama said.
Harvard professor Gregory Mankiw, who has written a best-selling textbook on economics, said what he teaches is different from what Clinton and McCain are saying about gasoline taxes. “What you learn in Economics 101 is that if producers can’t produce much more, when you cut the tax on that good the tax is kept . . . by the suppliers and is not passed on to consumers,” he said.
House Majority Leader, Steny Hoyer, has announced his opposition to the summer gas tax suspension. “A suspension of the tax would not be positive,” Hoyer said. “The oil companies would just raise their prices.”
House Majority Leader, Steny Hoyer
In a column entitled, “Political Pandering,” Jonathan Alter of Newsweek writes, “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.”
Alter adds: “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.”
Alter lists these ways that this “gas pander” is bad:
- 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.
- It sends more hard-earned money to the Middle East, which is terrible for our national security.
- It worsens global warming by encouraging gasoline consumption.
- 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.
- It will cost the U.S. Treasury at least $8.5 billion and probably much more, according to state highway officials.
Obama voted three times for a tax holiday when he was in the Illinois legislature. Legislators were responding in 2000 to gas reaching $2 a gallon in the Chicago area.
The version that ended up becoming law required a six-month suspension of the state’s share of the sales tax on gasoline, a 5 percent tax paid directly by consumers rather than gas stations. It also required gas stations to post signs on their pumps saying that the Illinois General Assembly had lowered taxes and the price should reflect that cut. The impact of the tax holiday was never clear. Many lawmakers said their constituents didn’t seem to have benefited, and they also worried the tax break was pushing the state budget out of balance.
Obama’s presidential campaign claims the lessons of that Illinois tax holiday influenced his decision to oppose a national tax holiday.
