Re: Economists blast Clinton-McCain gas tax holiday as bad idea
- From: "Jerry Okamura" <okamuraj005@xxxxxxxxxxxxx>
- Date: Wed, 30 Apr 2008 07:00:17 -1000
When you give people money, they will either spend it, or they will save it. If they spend it, they will spend it on what they want to spend it on. There is nothing that government can do to tell people how they will spend that money. "If" they spend the money buying gas, that is their decision....it is as simple as that.
"Harry Hope" <rivrvu@xxxxxxxxxxxxx> wrote in message news:fc3h141021i5rhf9rsv8i6h5vbtvc5jumm@xxxxxxxxxx
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.
.............................................................................................
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.
From Reuters, 4/30/08:
http://uk.reuters.com/article/oilRpt/idUKN3038243520080430
Clinton-McCain gas tax holiday slammed as bad idea
By Alister Bull
WASHINGTON (Reuters) -
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.
____________________________________________________
So much for another lousy idea.
Harry
.
- References:
- Economists blast Clinton-McCain gas tax holiday as bad idea
- From: Harry Hope
- Economists blast Clinton-McCain gas tax holiday as bad idea
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