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McCain-Clinton Gas Tax Holiday is Bunk

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If you don't support a gas tax holiday as the solution to high energy costs and economic woes then you're "out of touch" with ordinary working people, Hillary Clinton and John McCain recently claimed.

Unfortunately the statement itself suggests that they might be out of touch.

According to recent media reports, economists are blasting the gas tax holiday as likely to accomplish the exact opposite of what its proponents claim it would do.

For example, Eric Toder, an economic analyst at the Urban-Brookings Tax Policy Center in Washington was quoted in a Reuters article recently as saying, "You are just going to push up the price of gas by almost the size of the tax cut."

It turns out that if the price of gas is reduced by eliminating the 18-cent gas tax, which pays to rebuild things like the collapsed bridge in Minneapolis and the freeways that run through and between our cities, increased demand will simply push gas prices up the additional 18 cents, say economists in an almost universal chorus.

Additionally, neither Clinton nor McCain, who are the most vocal supporters of the gas tax holiday, have linked it to any new policy that could be implemented as quickly that offsets the invigorated demand for gasoline the idea would create. They failed to link the gas tax to a new policy that addresses the international price of oil or to a new push to find energy alternatives.


While Clinton distinguishes herself from McCain by touting a gasoline price-gouging bill, which Obama also backs, her idea would not be enacted until 2009 at the very earliest. Thus billions in lost revenue for highway repair and reconstruction, added national debt, and heightened demand for gas this summer will not reap American voters any benefit.

Oh wait. There is the savings during the gas tax holiday. According to an online calculator at Jabberwonk.com the savings for most gasoline consumers will be minimal. But remember there would only be any savings in the most optimistic and unrealistic predictions where new demand caused by the gas tax holiday doesn't push up the price. The savings literally would amount to a handful of dollars over the entire summer: a gallon of milk, a carton of eggs, and a pound of hamburger. That's about it.

"It would last for three months and it would save you on average half a tank of gas, $25 to $30," Obama told a large crowd in Wilmington, North Carolina earlier in the week.

By challenging the Clinton-McCain conventional wisdom on the gas tax holiday, Barack Obama proved he is far more in touch than either Clinton or McCain with working Americans who use gas. He also staked a claim that he is more willing to make a fight for real policy changes with substantive results.

Instead of pandering, we need national leaders who are going to fight for real energy alternatives to petroleum, refuse to vote for wars designed to make oil more expensive, and promote real investment in infrastructure reconstruction.

 

--Joel Wendland is editor of Political Affairs.

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