Clinton-McCain gas tax holiday slammed as bad idea
inmytree
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http://news.yahoo.com/s/nm/20080430/pl_nm/usa_politics_gastax_economists_dc
Clinton-McCain gas tax holiday slammed as bad idea
By Alister Bull1 hour, 4 minutes ago
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."
Republican McCain and Democrat Clinton, who is battling Obama for their party's nomination, both want to suspend the 18.4-cents-per-gallon federal gas tax during the peak summer driving months to ease the pain of soaring gas prices. The tax is used to fund the Highway Trust Fund that builds and maintains roads and bridges.
Economists said that since refineries cannot increase their supply of gasoline in the space of a few summer months, lower prices will just boost demand and the benefits will flow to oil companies, not consumers.
"You are just going to push up the price of gas by almost the size of the tax cut," said Eric Toder, a senior fellow at the Urban-Brookings Tax Policy Center in Washington.
Obama criticized the plan as pure politics and said the only way to lower the price of gas is to use less oil.
"It would last for three months and it would save you on average half a tank of gas, $25 to $30. That's what Senator Clinton and Senator McCain are proposing to deal with the gas crisis," he said on Tuesday in Winston-Salem, North Carolina.
"This isn't an idea designed to get you through the summer, it's an idea designed to get them through an election."
This stance has prompted Clinton to accuse him of being out of touch with ordinary Americans as she campaigns ahead of key presidential nomination contests in North Carolina and Indiana on May 6.
CLINTON AT THE PUMP
The New York senator was commuting to work in South Bend, Indiana, on Wednesday and planned to pump gas at a gas station to draw attention to her plan to suspend the gas tax on consumers and businesses.
"We will pay for it by imposing a windfall profits tax on the big oil companies," she said on Tuesday. "They sure can afford it. This is a big difference in this race. My opponent opposes giving consumers a break from the gas tax but I believe the American people are being squeezed pretty hard."
The cost of a gallon of gasoline has touched $4 in some parts of the country as oil prices nudge toward a record $120 per barrel, hammering drivers at a time when higher food prices and falling home values are already crimping U.S. consumers.
Many economists implicitly agreed with Obama and said the McCain-Clinton gas tax plan sent the wrong signal on energy efficiency and was at odds with their pledges to combat climate change by encouraging lower U.S. carbon emissions.
"I think it is a very bad idea," said Gilbert Metclaf, a economics professor at Tufts University currently working with the National Bureau of Economic Research.
"If we want people to invest in energy-saving cars, we need some assurance that the higher price paid for these cars is going to pay off through fuel savings," he said. "It is a very short-sighted, counterproductive proposal."
Economists also saw it is a poor way of getting money to the households that need it most and warned that it might end up in the cash tills of the oil companies.
"If you want to provide households tax relief, a direct rebate ... is more effective. Not all of the tax relief from a gas tax holiday will be passed on to consumers. Some will likely be kept by refiners," Mankiw said in an e-mail response.
New York Times columnist Paul Krugman was similarly underwhelmed: "It's Econ 101: the tax cut really goes to the oil companies," he wrote on his blog on Tuesday.
Clinton-McCain gas tax holiday slammed as bad idea
By Alister Bull1 hour, 4 minutes ago
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."
Republican McCain and Democrat Clinton, who is battling Obama for their party's nomination, both want to suspend the 18.4-cents-per-gallon federal gas tax during the peak summer driving months to ease the pain of soaring gas prices. The tax is used to fund the Highway Trust Fund that builds and maintains roads and bridges.
Economists said that since refineries cannot increase their supply of gasoline in the space of a few summer months, lower prices will just boost demand and the benefits will flow to oil companies, not consumers.
"You are just going to push up the price of gas by almost the size of the tax cut," said Eric Toder, a senior fellow at the Urban-Brookings Tax Policy Center in Washington.
Obama criticized the plan as pure politics and said the only way to lower the price of gas is to use less oil.
"It would last for three months and it would save you on average half a tank of gas, $25 to $30. That's what Senator Clinton and Senator McCain are proposing to deal with the gas crisis," he said on Tuesday in Winston-Salem, North Carolina.
"This isn't an idea designed to get you through the summer, it's an idea designed to get them through an election."
This stance has prompted Clinton to accuse him of being out of touch with ordinary Americans as she campaigns ahead of key presidential nomination contests in North Carolina and Indiana on May 6.
CLINTON AT THE PUMP
The New York senator was commuting to work in South Bend, Indiana, on Wednesday and planned to pump gas at a gas station to draw attention to her plan to suspend the gas tax on consumers and businesses.
"We will pay for it by imposing a windfall profits tax on the big oil companies," she said on Tuesday. "They sure can afford it. This is a big difference in this race. My opponent opposes giving consumers a break from the gas tax but I believe the American people are being squeezed pretty hard."
The cost of a gallon of gasoline has touched $4 in some parts of the country as oil prices nudge toward a record $120 per barrel, hammering drivers at a time when higher food prices and falling home values are already crimping U.S. consumers.
Many economists implicitly agreed with Obama and said the McCain-Clinton gas tax plan sent the wrong signal on energy efficiency and was at odds with their pledges to combat climate change by encouraging lower U.S. carbon emissions.
"I think it is a very bad idea," said Gilbert Metclaf, a economics professor at Tufts University currently working with the National Bureau of Economic Research.
"If we want people to invest in energy-saving cars, we need some assurance that the higher price paid for these cars is going to pay off through fuel savings," he said. "It is a very short-sighted, counterproductive proposal."
Economists also saw it is a poor way of getting money to the households that need it most and warned that it might end up in the cash tills of the oil companies.
"If you want to provide households tax relief, a direct rebate ... is more effective. Not all of the tax relief from a gas tax holiday will be passed on to consumers. Some will likely be kept by refiners," Mankiw said in an e-mail response.
New York Times columnist Paul Krugman was similarly underwhelmed: "It's Econ 101: the tax cut really goes to the oil companies," he wrote on his blog on Tuesday.
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Comments
hmmm...
that's an interesting and mature response...
what don't you understand about it? I'd be happy to clear it up for you
I'd love to see the actual drop in prices. The $18.5 cents per gallon tax would be removed, but I would bet a million dollars that prices at the pump wouldn't drop that much.
was like a picture
of a sunny day
“We can complain because rose bushes have thorns, or rejoice because thorn bushes have roses.”
― Abraham Lincoln
well initially they'd drop 18.5 cents.
I fill up every other week because I have a short commute and I'm conserving anyway. So, this means when I fill up, I'll save a whopping $2.85 every time I fill up. WOO friggin HOO. Don't spend that $2.85 all at once, ok? Instead of spending $52. at the gas pump, I'll be spending $49. Either way you slice it, its $50 more or less. If you fill up every week, you'll save about $6.00. Over the summer if you fill up once a week, your total savings is about $70. Sure, that's nothing to sneeze at overall, but come on...you don't get that money all at once to actually feel the impact.
Lets not forget that typically in the summer months, gas prices go up anyway because of demand. So, lets say they drop the tax, I'd say in probably 2-3 weeks, we'd be paying that full price and probably beyond, again due to the typical increase. If the idea is that they are trying to help out during the summer months because we travel more in our cars to our family vacations...don't we fill up more often when we travel? So, still without the tax, you'll be driving more so paying for more gas anyway?
Then, bonus for us...after Labor day...they add the $.19 back on.
This whole thing is like puting a band aid on a gaping head wound and it is not solving the ultimate problem.
Man, this thing just pisses me off.
http://www.reverbnation.com/brianzilm
again, so you would rather pay it in spite? I'm really surprised to hear so many people bitch about this. me, I'll gladly take 19 cents off the price. if I drove.
Yeah it would be nice, but I would know that it would go right up again. It's almost like sleeping with a supermodel who has the clap. It's cool at the time, but you'll pay for it eventually.
http://www.reverbnation.com/brianzilm
The problem is, as some people already alluded to, is that demand would increase and within a relatively short period of time the price per gallon would be around what you where paying before the gas tax was deferred. Added to that would be the millions upon millions of dollars of tax revenue that is collected with the tax that is used to repair, maintain and build transportation infrastructure that would no longer be there. It's just as stupid as the stimulus package. Let's give millions of Americans a couple of hundred dollars, not really enough to change their financial standings or alieviate financial burden, and in the process dig our country further into debt.
im not so sure of that theory. people arent going to be lining up at the pumps just because gas went from 3.89 to 3.70.
Yeah, at first glance, it sounds great. I'm just not a person that sees the benefit to a bunch of political smoke and mirrors to put $2-3 in my pocket every time I pull up to the gas pump.
Something that will effectively end in 3 months time. Ultimately resulting in a long term net benefit to me of, well...nothing.
and
that comment about sleeping with the supermodel who has the clap...very funny!
lol nice.
Why not. I've seen long lines at gas stations that have prices that are only a few cents cheaper. Not to sound elitist but the majority of the population are like fucking lemmings. All it will take is for a few people in the neighborhood to get all pumped up about the drop and all the other drones will follow.
we'll agree to disagree. I don't think demand would spike that much any more then the normal summer driving spike.
A near $.20 drop per gallon would definitely increase demand. Even if it doesn't the price would be back up to the pre-no tax price by the end of the summer and again millions, if not billions, of dollars would be missing that would be used for transportation infrastructure projects. To me it just seems like robbing from Peter to pay Paul.
That's already the nature of taxation. And I'm not a big fan of government sponsored behavior modification through taxation.
again, I think prices are so high, a .19 drop is not going to spike demand that much. a little? sure. but not much.
lost revenue? yes thats a problem. but do you know where that money (this specific .19 tax) goes?
Furthermore, every poitician who gives voice to the concept of "windfall tax" should first address the fact that the United States government has had it's own windfall of revenues via the gas tax.
Any politician who supports any of this bullshit should be laughed out of town. Unfortunately, they keep being voted into office.
So what do you think will happen if you did what you propose...lose the tax...cheapen the price...lose the subsides....up goes the price...back to square one...
I must say from reading these articles on gas there are many people who here who have no clue (not pointing at you) about the oil industry.....I am not defending the industry just that the costs to make gas (which includes labour rates that are sky-rocketing, which is one of many reasons) is one of the main drivers for higher gas prices.....plus world wide demand is going up everyday (look east).
If you want to here my proposition...I wish my country and my whore of a province would stop fucking supplying the USA/China as their primary customers and instead focus on developing refinery related jobs in Canada (which we are one of the top countries for oil has a natural resource) and treat Canadians as their first customers....therefore reducing our prices for our damn oil....America has been a leech for oil off my country, and China will surpass them as the primary leech within a decade, for far too long. It is a travesity that my gas prices are higher than those that cannot even support their own demand....pisses me right off.
And do not even get me started when, countries not to be named here, come taking our fresh water, because their's is shit....
dude, as an american I totally agree. if I were in your shoes I would be equally as pissed.
Its down right wrong....why should me and more importantly my fellow country-men have to pay more because some countries use more they can supply....it is so wrong....my posts are not to bash any country or it's people...it is hard for me to symapthize with people about gas prices when they are not even paying WHAT THEY SHOULD be paying for gas....America still has it good with prices, it is years of getting cheap foreign oil that has led to this spoiled behaviour....considering it cannot even produce what they need America still has it good......try living in a province with oil reserves seconding those of the Middle East and trying to justify why I pay more for gas than people down south....we have enough oil in this province alone to supply Canadian demand...I wish some corporation with a national conscious came around to revolutionize the industry to put their country first....do not fall for "Canadian-owned" oil companies slogans that promote their Canadian heritage....because they are whores to China....I will not name companies but there are many backing away from the USA as the number one client to make China their primary target....hence why American prices are going to rise even more dramitically in the coming years....
No. Do what I propose and the price ends up being higher than it currently is, which is exactly where it should be.
If you want to significantly lower the price of gas, just get rid of the taxes and the moratorium on drilling.
Absolutely! Wouldn't disagree there at all.
Let me see if I understand this. The US is a "leech", despite the fact we're paying you about $2,353,000,000 per day for oil? Are you really sure that you'd like to give up a chunk of that to save yourself a few bucks at the pump?
Ok.
Actually worldwide demand is leveling off. While demand may be on a steady rise in places like China and India. It is declining in other areas of the world to compensate for the increase. From 2005 to 2006 worldwide oil consumption increased by less than 2%. The same applies for the increase from 2006 to 2007. From 2007 to 2008 worldwide gas consumption increased by less than 1%. From January 2007 to January 2008 gas prices went from $50 a barrel to $100 dollar a barrel while the increase in consumption does not warrent that type of price increase. So this myth that gas prices are so high because of this huge increase in global consumption is just that a myth.
Exactly, well put. I think it's a stupid idea...
Did I read in the OP though, that McCain and Clinton are on one side of this and Obama and... BUSH (?) are on the other side? I mean I'd be ok if it were just McCain and Clinton on the same side, I'm pretty sure she's a repub anyway. But for Bush to be on the same side as Obama... well I feel like my head's going to explode. What could possibly be the explanation here? I don't see it as political posturing, surely this doesn't help McCain v. Obama, and with he and Hilldog being on the same side it makes it a moot point between them. Ahh I'm just gonna go look at that pic of Natalie Portman some more...
"Sometimes I think I'd be better off dead. No, wait, not me, you." -Deep Toughts, Jack Handy
care to share where u got this info from?
How about you send us a discounted resource and we will sell it back to you at a premium price....then tell me how you feel about it then....trust me, from looking at your posts and economic savy (yes that is a compliment) if you were in my shoes that dollar figure would not be enough......
Worldwide demand will certainly slow in the face of $100/b prices, but it's not "leveling off". You can view historical data here:
http://www.eia.doe.gov/emeu/ipsr/t46.xls
Here's the year-to-year increase since 1987:
1987 Average 2.08%
1988 Average 2.96%
1989 Average 1.71%
1990 Average 0.91%
1991 Average 0.90%
1992 Average 0.28%
1993 Average 0.20%
1994 Average 1.87%
1995 Average 1.75%
1996 Average 2.23%
1997 Average 2.44%
1998 Average 0.86%
1999 Average 2.24%
2000 Average 1.32%
2001 Average 0.97%
2002 Average 0.82%
2003 Average 2.02%
2004 Average 3.42%
2005 Average 1.61%
2006 Average 1.33%
2007 Average 0.97%