"Dumb on all counts" - the experts chime in on the gas tax holiday idea
Photo by Ewen and Donabel. Licensed under Creative Commons license 2.0.
First, Republican presidential candidate John McCain had the brilliant idea to prove his ignorance of the economy by calling for a gas tax holiday. Basically, he proposed, the federal gas tax (currently set at 18.4 cents a gallon) and the diesel tax (24.4 cents) should be suspended between Memorial Day and Labor Day. Not much later, Democratic candidate Hillary Clinton made the wrong move and backed the plan. Thus far, Democratic challenger Barack Obama is keeping his wits about him and is denouncing the plan.
But what do people who aren't running for president think? It's impossible for us to keep tabs on everyone who discusses the energy issue, because everybody's talking about it. Still, I wanted to point out one bit of media that covers the issue better than any other I've read/seen/heard. Earlier today on the Diane Rhem Show, three guests - Neil King, Jr., The Wall Street Journal's international energy reporter, Roger Diwan, partner, head of financial advisory PFC Energy, Mark Cooper, director of research for the Consumer Federation of America - discussed the gas tax holiday and rising oil prices. I'm not sure which one of the three said it, but one of them called the idea "dumb on all counts." He is not the only critic of the idea (Tom Friedman recently lambasted it); in fact, it seems like just about everyone says it's a bad idea. Diane told her listeners that the show's producer looked long and hard for someone to defend the idea, but couldn't find anyone who was willing. And, while we can't possibly point you to everyone's thoughts on this issue, this morning's Diane Rhem show (listen here) presents a good, hour-long discussion on why McCain and Clinton has grabbed the wrong end of this political stick. Your thoughts?
Reader Comments (Page 1 of 3)
Mike 2:36PM (5/01/2008)
At least it's an attempt. Obama hasn't come up with anything and no one else in Washington is even trying to do anything.
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P.Fezziwig 2:44PM (5/01/2008)
Government is raking in a huge tax windfall. They make more money just like big oil companies when the price goes up.
The tax rate does not reflect the sudden increase in gas prices therefore they should lower it or give a tax holiday, there is no justification by the government to gouge consumers like big oil and OPEC.
Staff, http://www.greencarsnow.com
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Woodenbee 2:46PM (5/01/2008)
Whats with all the stay at home right wing apologists getting on here, here's some pointers if you don't believe in Climate Change or renewable energy, guess what! you don't need to be commenting on this site. I don't go on Republicansforglobaldestruction.com and put in my 2 cents, I don't know enough about it, I just have to live with it.
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brn 2:54PM (5/01/2008)
The price went up $0.30 in the last two weeks. What good is an $0.18 temporary decrease going to do. The oil companies will just raise the price another $0.50. The problem isn't the tax.
P.Fezziwig, what the heck are you talking about? The Gov't doesn't make more money as the price of gas increases. It's a fixed dollar amount, not a percentage.
Personally, I wouldn't mind if the oil companies got $2.00 less per gallon and the gov't got $2.00 more. Then there's a chance all that the money will do some good.
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Jay 2:55PM (5/01/2008)
It's a great idea! If you want the votes of folks who don't think more deeply than lower tax = great for me.
It's a horrible idea if you consider that if it initially lowered the price of gas at the pump (debatable since oil companies and station owners are under no obligation to do so) it would most like raise demand (hey, prices are lower, I'll fill up my hummer!). Demand goes up. Supply does not. Price goes up.
You could possibly see a lower price for a few weeks. Followed by another jump. All while taking money out of the transportation departments measly budget and giving it to the oil companies.
So horrible idea. Unless you want a few votes.
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jpm100 3:13PM (5/01/2008)
I considered this idea suprisingly smart from McCain.
Firstly, its not an energy or alternative or anything. This was a comprehensive anti-recession decision.
Secondly, a few dimes might not seem like much but where I am, the price of gas is at a turning point. $3.50-$4.00 seems to be the transition spot where people change their behaviors.
The problem is that their change isn't to run out and buy hybrids right away. It to cut back on driving. This will likely mean people staying home on many of the holiday weekends that they normally travel.
People staying at home this summer could turn this downturn into a technical recession.
A recession will be an opposing force for development of new energy technologies. Both by government and companies. Depending on how long it lasts, many of these upstarts meeting the demand for batteries, alternate fuels, etc. will fail waiting. Then the whole deal gets to start over again later.
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1985 Gripen 3:27PM (5/01/2008)
I agree with Mike. At least McCain was TRYING, even if in hindsight it won't help all that much and could possibly even be counter-productive) to help the common working man with his expenses.
I know if it were up to obvious Obama-supporter Sebastian Blanco and ABG everyone would invest in Toyota stock because ownership of a hybrid would be mandated by government. Maybe every person in the mid-west should turn-in their Ford or Chevy work truck and instead buy a Phoenix truck. We know ABG is against ethanol, so that's out.
What has Obama proposed? How does he want to help the lower and middle class, many of whom commute over an hour a day to work? Maybe they should all just move to San Francisco (as if they could afford it due to the obnoxiously-high cost-of-living...) and use BART? People not living on the coasts are apparently unimportant to Obama and his supporters anyway.
Obama obviously knows that government will solve everyone's problems quickly and most efficiently. Though someone else will have to come up with the ideas how. He's too busy being opposed to everything. What's Obama's stance on an issue? Wait until someone else comes up with an idea, then be the candidate of "change" and oppose it. Everyone knows politicians stink so he must be right!
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LaughingMan 3:41PM (5/01/2008)
To whoever says that the government makes a windfall when the price of gas goes up, that's totally wrong.
The tax on gas is a fixed amount per gallon. It isn't a percentage of the price of gas. If anything, higher gas prices hurt the amount going to pay for the price of road maintenance because consumption will go down.
The tax on top of gasoline has not kept up with the rate of inflation over the years. Combine that with the rising price of gas, and we're actually paying less and less taxes compared to the price of gasoline.
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LaughingMan 3:46PM (5/01/2008)
jpm100:
So McCain's plan will help stem the tide of recession by giving driving Americans an average of $2 per fillup?
What about the flip side? What about the road construction jobs that will be lost because the government will have to cut back on road repairs because of the millions of $ of taxes that won't go into the highway repair fund?
What will we do when we have more crumbling bridges like we had in Minnesota?
Cutting the gas tax makes no sense... it's just distraction to make people drive more and stay dependent on oil for one more summer. Who's to say that the oil companies won't raise the price to make up for the 18 cents that were lost?
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nbil 3:49PM (5/01/2008)
wow, a lot of passion on this one. The experts agree that this is a bad idea. Saying "at least so and so is trying" doesn't change that. A bad idea isn't trying, it's wasting time and probably doing more harm than good.
Saying "What has Obama proposed?" is uninformed. Each one of the 3 candidates has an energy policy. Clinton and Obama basically have a similar amount budgeted for it, McCain has much less. Point is that they've all proposed something.
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Rob O. 3:53PM (5/01/2008)
I'm still not clear on why this was proposed in the first place. Is it purely to get us consumers in the mood to travel as much as we used to during the Summer months or is there more to it than that?
One angle to consider is that if the price stays - if there's no tax holiday - maybe this'll keep the pressure on those who're being hit really hard by fuels costs needlessly. Y'know, the lugnuts who use Dodge Rams, F250 trucks, Lincoln Navigators, & Chevy Suburbans as single-occupant commuter vehicles. I pass dozens of those idiots as I navigate my way to work each morning in my little 4-banger Honda that carries 3 of us quite comfortably on our daily commute.
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1985 Gripen 3:55PM (5/01/2008)
Comments like Woodenbee's above really bother me. As if the Democrats have done anything to help mitigate climate change in the past few years of having control of both the House and Senate.
And ABG really should be called "AutoBlogGreenPartyandDemocratsOnly"? I thought the charter of ABG was to cover issues affecting car lovers who care about the environment? It's apparently to demonize automobiles and to explore possible (unlikely) replacements?
Liberal Democrats (I'm not talking about sensible left-leaning centrists, I'm talking the hardcore partisan almost-green-party types who live to fight "the other side" like Woodenbee sounds to be) have a lot of faith that government can fix the problems of The People.
Let me give you an example of Democrat government (in)efficiency: I live in the City of Los Angeles. We've had a Democrat-dominant government here for as long as I can remember.
The City has spent so much money on B.S. pet projects and programs that the most basic functions of City government are being neglected due to insufficient funds now. Most of these Democrat politicians would love to simply get more revenue by taxing more. Or specifically in this case raise the price of trash pickup in the City as has been proposed.
Our sidewalks are in disrepair. The City Council is examining possibly turning over the responsibility of paying for sidewalk repair onto homeowners. When a homeowner sells a house the City Council is proposing to charge the homeowner to repair the sidewalk. This is despite the fact that the sidewalk is CITY property, not the homeowners'.
The City will repair a sidewalk only if the sidewalk damage was done by trees (but not earthquakes or shifting soil underneath, I assume). The current waiting period to have your sidewalk repaired if you put in an official request today: 40 years. That is not a typo. FOUR ZERO YEARS!
If government can't even hold-off on crazy spending of taxpayer dollars enough to handle the basics such as sidewalk repair, how do you have faith in them that they will be able to manage the money required to reduce global greenhouse emissions?
The answer is not to tax more. It's to spend less. Use the free market to encourage people to drive less. Gas prices at $4 a gallon? This will cause people who own large pickup trucks and SUVs as a status symbol to trade-down, but it'll also cause legitimate businesspeople who need that equipment in their job to have to continue paying more and more money and drive up the prices of EVERYTHING as they pass-on those expenses to the consumer.
High fuel costs means higher costs of everything. It's en vogue to blame ethanol for driving up the price of food. The price of petroleum rising and the weakening of the U.S. dollar are far more at fault for rising food prices than ethanol production. However, those factors aren't as glamorous to demonize. Let's point at "Big Corn" as the bad guy while "Big Oil" gets-off scott free. Makes sense to me...
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LaughingMan 3:56PM (5/01/2008)
Tax cuts are a strange thing. Everyone always feels that they are taxed too much for everything and that taxes are "high enough" so saying that the taxes for something can be cut always generates a predictable response...
The problem is that there's never such a thing as a free lunch. Tax cuts cost somewhere, and more often than not, you'll be paying for it down the line. In this case, we'll be paying for it with crumbling roads and bridges. Look at the whole picture... not just what your gut feeling is.
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Jon 4:02PM (5/01/2008)
"At least it's an attempt. Obama hasn't come up with anything and no one else in Washington is even trying to do anything."
Haven't we had enough of leaders that do something dumb to prove they are doing something? That's a pretty expensive habit for the American taxpayer to be supporting. I wish they'd pick up the same oath doctors take: "First, do no harm."
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jmspearman 4:03PM (5/01/2008)
Encouraging consumption is the last thing we need right now. For the first time since the 1970's Americans are thinking about two things: how important is it for me to drive my car to X or Y, and should I think about buying a more fuel-efficient car.
Also, high fuel costs are the driving force behind all this solar and wind investment, not to mention the R & D for alternative-fuel cars.
There will be a few hiccups, some big, some small, like the ethanol/food debate, or the avian impact of windmills, but the good news is that we are finally doing something productive and it's the market forces that are driving the change.
Let the oil companies rake in their profits for a few years, then go out and buy yourself solar panels for your roof and an electric car, then and only then can you give oil companies the middle finger
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Jon 4:11PM (5/01/2008)
1985 Gripen,
Do you really want to get into a tit-for-tat about stupid things liberals have done vs stupid things conservatives have done? Besides making you feel better, what good does that do?
How about: smart things we can all agree on? Can we focus on that a bit and drop the labels?
Isn't anyone else getting sick of these red/blue culture wars? Jeez. How about keeping the focus on what demonstrably works?
And the tax holiday doesn't fit in that category. All economists agree to that, whatever their party affiliation. It's pure pandering and nothing but. The proposal assumes that you are stupid. Prove 'em wrong. Reject it.
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1985 Gripen 4:32PM (5/01/2008)
Just learned on CNN: when Obama was a senator in the Illinois legislature he supported a gas tax holiday and that was when gasoline only cost $1.52 a gallon. After that the price of gas dropped 8 cents.
Now that the price of gasoline is about 60% higher than it was then and his opposition supports a gas tax holiday he's the contrarian.
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1985 Gripen 4:41PM (5/01/2008)
Jon, my reaction was due to Sebastian's overt support of Obama and continued bashing of McCain through 'blog posts at ABG. It was also a reaction to Woodenbee's comment. Interesting that nobody reacted to his comments as long as they agree with him, but if someone posts comments you don't agree then you attack.
And as far as "red versus blue" I don't enter into that argument. I think for myself and don't align with a party to think for me.
What I would really like to see is instead of "I oppose that" some "here's what I would do". As for Obama's alleged energy policy he throws-in support for tons of technologies which very few people would oppose. I mean, who's going to oppose "more clean technologies such as solar and wind"?
McCain proposes a tax holiday to try and help the average joe and is attacked for it. Yet in forums such as this Obama gets a free ride despite overtly claiming support for ethanol, which ABG consistently attacks.
On ABG if McCain says anything regarding energy policy he's roundly attacked. If Obama says something people agree with he's praised and if he says something they disagree with (which isn't very frequent as he rarely sticks his neck out and takes a stand on anything controversial) they ignore it.
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1985 Gripen 4:49PM (5/01/2008)
Oops, how did I miscalculate that? I wrote that the average price of a gallon of gasoline now that Obama opposes a gas tax holiday is 60% higher than when he supported a gas tax holiday as an Illinois senator.
It is much higher than that now. It was $1.52 now and is $3.58 now. That's more than twice (235%, if I calculated right this time) as much.
Sorry for my poor math.
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BoomBoom 4:56PM (5/01/2008)
The economists and energy policy experts agree that it is a bad idea. (All those "liberals" at the Wall Street Journal.) Obama apparently listened to them and has changed his mind about a gas tax holiday since he was in a IL legislature. The McCain and Clinton approach appeal to the ditto-heads like Gripen would like their $25 bucks even if it means delays in road construction. This gives me one more reason to dislike Clinton.
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