I mentioned in a post last week that the current debate raging between the three remaining presidential candidates over whether a summer moratorium on the federal gas tax, and the particular caveats in the enactment of that moratorium, is the only interesting, substantive policy question to arise since the Iraq War troop surge. I then derided people for focusing on bullshit, tangential issues instead of this far more important matter.
Of course, like a true political blogger, I fell victim to the very social plague I railed against, skipping right past the substance while taking great pride in pointing out how everyone around me was a big moron. Well, as it turns out, I am the moron. Shame on me for being so hypocritical. Allow me to rectify the situation now.
The federal government, as everyone knows, taxes gasoline at a rate of 18.4 cents per gallon. The government uses revenue from the tax to pay for the building and repairing of roads and bridges and other things of somewhat high-level importance. For all intents and purposes, it’s a pretty good tax. The public pays into a system and is rewarded with improvements to the services provided to them by their government. If all tax spending worked as efficiently and transparently as in this particular case, I think it’s fair to suggest people would stop bitching so much about paying taxes and be glad their money was being used to provide them with things they need and want, but I digress.
Somewhere along the way, John McCain, Hillary Clinton and the people who advise them got the idea that cutting the federal gas tax during peak summer driving months would be a good idea. In reality, though, it is completely asinine. And it’s not just a little asinine. It’s so asinine, in fact, not a single economist backs either McCain’s or Clinton’s plans — this at a time when you can get a so-called credible expert to support even the most egregious falsehood (see: the build-up to the invasion of Iraq).
To be clear, Barack Obama is the only reasonable one of the bunch. He has called out the gas-tax holiday for exactly what it is — a cheap political ploy that panders to voters but does nothing to help them. Of course, by once again treating the American people like adults capable of understanding the long-term benefits of not cutting a tax, Obama is taking a huge political gamble. The American people are notorious buffoons and suckers for the promise of extra cash.
McCain and Clinton, on the other hand, continue to talk to voters like they’re grubby, money-loving children and, as such, have slightly different versions of the plan. McCain’s proposal, as you’d expect, is the more ass backward of the two, at least on paper. The very senior Senator from Arizona wants to cut the tax without compensating for it, something most experts agree would cost the country the money it needs to maintain its infrastructure. Countless construction jobs would be lost, bridges and roads would continue to crumble, the economy would slip further into recession.
Now, I’ve come to expect such half-assed schemes from McCain, because, well, he’s not very bright. Unfortunately, bravery and the ability to withstand years of torture don’t counteract the effects of aging on the mind. He’s simply lost, like grandpa, full of piss and vinegar and crazy ideas, not to be trusted with anything more important than keeping the crystal stocked with rock candy.
But Clinton, for all her flaws, of which I humbly believe there are many, is usually a bit sharper, especially on more complex issues like this one. Her plan also calls for the temporary suspension of the federal gas tax, but unlike McCain she proposes to pay for the holiday — that makes it sound so fun — with a “windfall profits tax” on oil companies. The windfall profits tax would charge oil companies a 50 percent tax on profits exceeding a certain dollar amount, something they can certainly afford considering how much money they’ve made in recent years.
There is only one problem with this idea: The windfall profits tax doesn’t exist and has little chance of getting passed by a legislative branch as inept and dysfunctional as this one. Even if Congress could get its shit together, I think it will take a bit longer than the month or two between now and the time when Hillary wants our little vaycay to begin. Throw in the fact that any increase in taxes on oil companies will likely be passed on to the consumer, thanks to our wonderful free-market capitalist system, and Clinton’s plan starts to sound even dumber than McCain’s.
For the faithful who still choose to believe in either McCain’s ill-conceived economic lunacy or Clinton’s adventures in a legislative fantasy land, perhaps because the hope of thirty extra bucks is just too enticing, there are more reasons why the gas-tax holiday makes no sense whatsoever.
First, there is nothing at all to suggest that gas-station owners will pass the tax cut onto consumers. This type of trickle-down economics never reaches the customer. We’ve seen it time and again since Reagan first introduced this mind-bogglingly stupid theory. Those at the top of the pyramid drown in excess profit and those at the bottom continue to struggle. The most likely scenario would see those who own gas stations reducing prices at the pump only slightly, while pocketing the difference saved by the repeal of the tax.
Following the money, then, thanks to the consumer frenzy likely to ensue once the “holiday” is announced, it becomes more and more clear that the oil companies would benefit most. The best either plan does to ensure that prices are set fairly is to “monitor for manipulation,” an empty, unenforceable promise from Clinton.
More importantly, though, the gas-tax holiday does absolutely nothing to get at the root cause of the ridiculous spikes in prices. In fact, it would make the problem worse.
Getting rid of the federal gas tax would only encourage people to drive more, increasing the demand for gasoline, which is already in short supply. Therefore, as any high-school economics student knows, the underlying cost of gasoline will only increase. The only way to keep things stable is to increase both supply and demand at the same rate. Unfortunately, McCain and Clinton don’t seem to be thinking that far ahead.
Increasing the demand for gas would also hinder the progress made by technology companies working to increase fuel-efficiency standards or the use of alternative fuels. The environment simply cannot take the postponement of these advancements.
Gas prices have surged for numerous reasons too complex for me understand or attempt to articulate, but these reasons are directly related to broader issues like the war in Iraq, the weakening of the U.S. dollar, and the increase in the number of oil companies owned by foreign states, namely those controlled by Venezuela and its America-hating president Hugo Chavez.
The issue has deep geopolitical roots that require long-term solutions and big-picture thinking. Attempted fixes involving anything less, like this ridiculous gas-tax holiday, simply miss the point, ignore the real problems, and dupe the public in as transparent and shameless a way as we are ever likely to see.