The Mad Rants of an Unconventional Soccer Mom

Clinton and McCain have tag-teamed against Obama with their “Gas Tax Holiday” gimmick. And let’s be honest, that is all it is. It’s pandering to get some votes. They are both proposing an 18 cent suspension on the federal gas tax. Economic experts are in general agreement that over the three month summer period that this may save the average driver about $30 dollars. They also agree that this will not work and will have a devastating effect on our economy. Here is a snippet of what the experts are saying:


Michael Bloomberg said yesterday:

It’s about the dumbest thing I’ve heard in an awful long time from an economic point of view. I don’t understand why you think there’s any merit to it whatsoever. We’re trying to discourage people from driving and we’re trying to end our energy dependence. You don’t do that- and incidentally, and we’re trying to have more money to build infrastructure. All three of those things go- fly in the face of giving everybody 30 bucks a year. The 30 bucks is not going to change anybody’s lifestyle. The billions of dollars that we would otherwise have in tax revenues can make a big difference as to what kind of a world we leave our children.

Uber-Clinton supporter and leading economist Paul Krugman's analysis:

Anyway, John McCain has a really bad idea on gasoline, Hillary Clinton is emulating him (but with a twist that makes her plan pointless rather than evil), and Barack Obama, to his credit, says no....The Clinton twist is that she proposes paying for the revenue loss with an excess profits tax on oil companies. In one pocket, out the other. So it’s pointless, not evil. But it is pointless, and disappointing.

And here's Tom Friedman on it as well:

Hillary Clinton has decided to line up with John McCain in pushing to suspend the federal excise tax on gasoline, 18.4 cents a gallon, for this summer’s travel season. This is not an energy policy. This is money laundering: we borrow money from China and ship it to Saudi Arabia and take a little cut for ourselves as it goes through our gas tanks. What a way to build our country.

Just yesterday Exxon reported only "the second-highest U.S. corporate profit on record, falling just short of the record $11.66 billion Exxon Mobil (XOM, Fortune 500) earned in the prior quarter" according to CNN. Exxon's profit was "only" $10.89 billion this quarter. That’s $119.7 million per DAY. And what does the “gas tax holiday” mean to the oil companies bottom line? Economists say 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.

And what are the real economic effects going to be if this happens? According to state highway officials and this article in the New York Times, this "Gas Tax Holiday" will lower tax revenue by roughly $9 billion and potentially cost 300,000 highway construction jobs. The highway trust fund that the gas tax finances provides money to states and local governments to pay for road and bridge construction, repair and maintenance.

How much will this gimmick save you? Here’s a cool “gas tax holiday” calculator. According to this I’ll save $27 dollars over the summer and I drive A LOT. That’s less than the cost of a tire, which with my luck will blow on my car due to all of the potholes that won’t be fixed because of this “holiday”.

And what is Obama’s plan to help Americans? He wants to encourage biofuels and technologies that will limit the nation's dependence on foreign oil. Additionally, he wants to double fuel economy standards within 18 years. Finally, he wants to establish a national goal of improving new building efficiency by 50 percent and existing building efficiency by 25 percent over the next decade. Is this good for the consumer? It certainly is over the long term. His insistence on alternative fuels and increased efficiency will benefit both consumers and the nation at large. He also backs Cellulosic Ethanol, which could potentially reduce greenhouse gases by 85 percent over reformulated gasoline, depending on the production processes used. Currently, we do not harvest cellulose, since it cannot be digested by humans. So, using cellulose for fuel will not compete with the production of food. According to Wikipedia, "323 million tons of cellulose containing raw materials that could be used to create ethanol are thrown away each year."

So will pandering and political theater win or will policy win? I’m afraid of what the answer is, but Obama said it best: "This isn't an idea designed to get you through the summer, it's an idea designed to get them through an election." . I guess we will see Tuesday night.