Pity The New York Times. When presidential candidate John McCain suggested suspending the federal gas tax– a republican-anti-tax-compatible theoretical quick fix for pain at the pump– no problem. Off with his head! But when Democratic presidential hopeful Hillary Clinton threw her support behind the plan, well, that's heresy! Needless to say, the tax-loving liberal paper give both John and Hillary a proper bitch slapping. "Nixing the gas tax would increase demand for gasoline — exactly the wrong response to global warming and rising energy prices. So wrong, in fact, that both Mrs. Clinton and Mr. McCain support policies that would cut carbon emissions and increase the price of energy. (Talk about voting for something before they voted against it.)." Bad consumer! Bad consumer! "Americans — like the rest of the world — must find ways to curb their use of fossil fuels. Higher, not lower, prices are an important way to spur the needed technological innovation and curb demand." While they're at it, how about a good old-fashioned Bush bash? (Only 194 days 'til the next election!) "There is not enough oil in Alaska to provide a lasting solution. And Mr. Bush’s prescription would do nothing to address climate change or quench the thirst for oil." Barak wins! "Fortunately, Mr. Obama has not caved to the rising calls for cheap energy and has refused to follow his rivals down this misguided path." The editorial ends with just the right touch of sanctimonious self-congratulation. "We know pandering when we see it."
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Well, it is pandering, especially when Hil stages an appearance where she pulls up in a pickup truck, sandwiched between a farmer and a steel worker, shaking her head in mock disapproval at the cost of filling up her truck.
As much as I rail on against increasing gasoline taxes, dropping them by 18 cents isn’t a quick fix. It’s not any fix, and it doesn’t address the issue. Raising fuel taxes fails to address the issue similarly.
Interestingly enough, as gas prices climb, people are giving up their Sequoias and Armadas and stepping down to something less consumption intensive, which is what they wanted to happen with extra fuel taxes. If people are stepping away from large SUV’s, then what’s the point of making fuel more expensive than it already is?
There was an overwhelming consensus to let the free market dictate whether GM should sink or swim. How ironic is it, then, that this consensus is conspicuously absent when it comes to letting the free market dictate whether we’re paying too much for gasoline?
I am truly anti-tax, and anti-NYT, but I have to agree that this plan is stupid. To save people pittence, it will cost a fortune.
quasimondo : There was an overwhelming consensus to let the free market dictate whether GM should sink or swim. How ironic is it, then, that this consensus is conspicuously absent when it comes to letting the free market dictate whether we’re paying too much for gasoline? I’m with you on this one. Wait, on the whole overarching invisible hand thing. But I’m also in favor of drilling everywhere; off-shore, Alaska, and yes, even my back yard. (I’ll move the swing set.) And building nuclear power plants. If the government must intervene– for national security reasons– I’m up for a multi-trillion dollar investment (i.e. tax breaks, thank you very much) for micro-hydrogen power stations using a variety of local power sources: wind, thermal, garbage, oil (!), natural gas, nuclear, etc. And some kind of deal to create the HY filling stations and encourage development of the cars. But not ethanol. Either that or… nothing. Hmmm. Nothing.
The average person, Dem or Repub or Indy, world-savvy or bubble-landish, probably doesn’t realize demand would just raise the price again to where it was, all the while slowing/stopping highway funds. To the average person, this is political gold. Hillary, I’m not surprised by her saying this, but I am surprised by McCain. My vote goes to whomever sells out the least…
Good thing the average person reads the NYT to get their opinions… too bad subscribers are going… going… gone!
*Full Disclosure: I get Sundays NYT in the mail Monday because I’ve enjoyed the magazine that comes with the paper.
For a liberal paper NYT has taken many swipes at Democrates over the years. Compare that to the Republican equivalent, Fox News :) Fox News still think the Bushies are manna from heaven, in spite of the fact that the country is falling apart.
Low gas taxes caused the high gas prices in the first place.
And NYT might be one of the few papers that escapes the paper media death spiral; they have one of the most popular news websites in the world.
I agree with guyincognito.
As far as drilling everywhere: no. Getting a few extra gallons (because that’s what it is) is certainly not worth the added environmental damage to the AWNR, nor the precedent it’ll set. Not to mention that those areas are fantastic reserves of bio-diversity, that we would do well to preserve for future biological research, which has a strong potential for economic development.
T
@Robert
I agree with the “nuclear option” in that I believe an electricity powered transportation system is the way to go. Until nuclear power has its renaissance, a shift in the transportation system to [more] centralized power generation which can be both more efficient and at least partially renewable is an answer. Finally, I see a time in the future where crude oil is used for something more valuable then powering cars. Don’t know exactly what that it right now, but I want to keep some oil in the US (in the ground) waiting for that time…
@ Quasimondo
How does “raising fuel taxes [fail] to address the issue similarly?” It seems to me that gasoline, while highly price inelastic, would eventually reach a threshold price above which consumers simultaneously use less gas AND make different purchasing decisions. Plus smaller and lighter cars are easier to power with plug-in hybrid technology (see plan above).
Ed S. : Gasoline consumption is actually quite elastic – witness the response to high gas prices in the 70’s.
Finally, I see a time in the future where crude oil is used for something more valuable then powering cars. Don’t know exactly what that it right now, but I want to keep some oil in the US (in the ground) waiting for that time…
You mean the 100 other uses for oil besides trasportation, composites mainly. If we use it now to fill up our Hummers to get milk how will we make high strength light weight composites in 50 years. It will be hard to build efficient electric cars in the future out of an iron box. For a finite resource we sure waist it on the dumbest things.
I hate taxes but this is a stupid idea, saving me virtually nothing at the pump so the infastructure can fall apart in the future because of lack of funds, smart. The only good thing I see is it gives less of our tax dollars to be frittered away by government idiots.
Ed. S,
Quite simply, if gasoline is already headed towards that direction, is there any point to using taxes to push it along any further? Is this going to accelerate the process in which everybody becomes more conservative about fuel?
The way I see it, fuel taxes are unnecessarily redundant if we’re already headed in this direction.
Does anyone believe Hillary, even for a second, would cut any tax?
I like Obama, but I’m concerned about a recent ad I saw of his about taxing “windfall profits” of oil companies. The oil companies are raking in the cash, but this cost will only be passed on to us. Either way you slice it, consumers will have to pay.
What we need is viable competition.
Fox News still think the Bushies are manna from heaven, in spite of the fact that the country is falling apart.
I guess I am an eternal optimist or something, but I just don’t see that the country is “falling apart”. We have our problems, no doubt, but I don’t think it’s quite that bad.
I like Obama, but I’m concerned about a recent ad I saw of his about taxing “windfall profits” of oil companies. The oil companies are raking in the cash, but this cost will only be passed on to us. Either way you slice it, consumers will have to pay.
I agree. People are looking at the total dollars but the the profit margins have remained around the 10% mark. I wouldn’t call that “windfall profits”. You are right in that consumers will pay for any additional taxes on the oil companies.
I wonder how many people are aware of the fact that many of their 401ks and IRAs are tied to oil companies (at least to some extent).
I agree with the term “pandering”. It’s an election year “throw logic to the wind” kind of deal. Really, the way to solve systematic problems (if you even believe this is a problem and not just an inevitability) is to change the system. With our country’s spending and deficit I can’t see how removing a tax, even temporarily, will cause any long term goodness. But I could be wrong. How about getting rid of the tax on booze? I’m all for that.
@ gsp
Yes, the country is falling apart, but the rich are still getting richer!
Again, the main problem is not so much rising demand in China and India for fuel (where I highly doubt most “middle-class” people could afford both a car and approximately $3/gallon for gasoline), it is the free-falling dollar. I imagine that much of the increased demand for oil in the (former) Third World is for infrastructure improvements and industry, rather than personal transportation.
None of the candidates has effectively addressed what he or she will do about our devalued currency. If the dollar appreciated 20%, then gas prices would fall about 20%. It’s that easy.
I am very skeptical why the candidates do not take on that issue in particular (or our massive borrowing). Cutting interest rates to zero just hastens the currency decline, makes savings and investments useless (1.5% interest on savings and money market!), and decreases incentive to invest in T-bills, causing further decline.
$30. Thats it. Thats all the huge holiday will save for the average american.
And actually, its probably LESS, because thanks to the general inelasticity on consumption, the refineries can raise their prices by $.18/gallon and get that money for themselves.
So really, McClinton’s proposal would likely be a big subsidy to Exxon/Mobile, without really benefiting the average american.
Hillary is just desperate. She needs to win every remaining primary by a sizable portion, plus a good majority of the super-delegates.
And I find this proposal very unlike McCain, but he knows he’s going to have his hands full with either Hillary or Obama, if funding is any indication. Despite the long, drawn-out quagmire, both democratic campaigns still have war chests that are at least twice as big as McCain’s. So my guess is he’s trying to be opportunistic, but it’s going to come at the expense of his appeal to independents.
Reducing the federal gas tax would simply mean more profits for the oil companies and oil producing nations as they raise the price back up. Supply and demand theory predicts this quite clearly.
The NYT is right, Obama has real political courage in not going along with this bit of political theater.
McCain is trying to be a Bush republican and propose tax cuts as the answer to all questions. Too much money coming into the gov’t … we need a tax cut. Too little money coming into the gov’t … we need a tax cut. He has a special spin he puts on things by always claiming that the cuts will be paid for by going after waste and corruption. Waste and corruption are indeed huge problems, but his math is highly suspect.
They can’t address the falling dollar. What they would need to do is to raise interest rates dramatically and divert spending from the war to internal projects that would help the country – forcing the country into a painful but hopefully short recession. Instead they keep cutting interest rates dragging out the pain hoping that some magic bullet will come to fix the economy.
The gas tax holiday is the most retarded thing to come out of McCain’s mouth, and that is saying a lot. Windfall profits taxes aren’t great either, but people forget that gas and oil aren’t free market products – they are controlled by OPEC and oligopolists. It would be one thing if there was an open market, but since there isn’t, regulation of profits can be considered appropriate if handled correctly.
To all those who argue whether gasoline demand is elastic or inelastic, the answer is: It’s both. Gasoline demand is generally understood as short-run inelastic but long-run elastic. The definitions of “short-run” and “long-run” are a bit fuzzy, but are tied to some of the following factors: Car purchase intervals (higher gas prices encourage purchase of efficient cars), intervals for switching homes or jobs (higher commuting costs might encourgae workers to seek shorter commutes, public transit options, or carpooling options), etc. High gas prices can induce changes in those behaviors, but the lead times tend to be long — hence long run elasticity. There is a little elasticity on the shorter-term side, often involving changing one’s leisure consumption (fewer shopping trips, shorter summer road trips, etc.), but for the bulk of consumption in the short term, well, people still have to get to work in the morning. Secular trends in economic growth also affect consumption (higher unemployment leads to fewer people commuting to work, reducing consumption, etc.).
Whether a cut in gas taxes would be passed straight to the consumer is a question of how competitive the market is. If the retail market is non-competitive, then the gas companies could pocket the difference and not change their behavior towards consumers. If, on the other hand, there is sufficient competition, then gas stations would go through a round of “fare wars,” giving back more and more of the tax cut until the consumer presumably got the benefit of the whole thing. Considering the high level of consolidation in the industry, I’m honestly not sure how it would actually work out.
But assuming that a tax cut would reduce the price that consumers pay, relative to what they would have paid had the tax remained in effect, I would support it under the following circumstances: That the deficit in summer collections be made up by a higher tax in the winter. The idea is that summer prices are usually higher because of increased demand, summer anti-pollution blends, and all the rest, and that we could potentially shave the peaks off the prices by cutting taxes — affording to do so by making up for it in the winter. This would, presumably, lead to steadier gas pricing throughout the year, which would probably be a boon to the average consumer, who could always use some help when to comes to predictability. I would not support a cut whose revenues are not later made up. This is because we need the road funding, and because gasoline consumption likely involves numerous social externalities, whose price should be taxed to the consumer, at least over the long run on average.
got to see hillary yesterday…
for her plan, in order to pay for the decrease the gas tax for the summer, she suggests taxing oil companies on their windfall profits…
that’s the most ridiculous thing I’ve ever heard.
Perhaps, just perhaps if you raise the ‘operating costs of a business’, it will pass those costs on to the people who buy goods and services from said business…
it’s already been proven that people will pay 3.65/gallon [for regular] here in the mid-west, and 4/gallon in many other parts of the country. If you decrease the price by 18.4 cents, the price will increase by 18.4 cents within 2 weeks again.
It was a good editorial. The gas tax holiday is absurd. Drilling in ANWR is rearranging the deck chairs on the Titanic, and burning the Louvre for tghe energy in one fell swoop. As for nukes, let them pay their insurance (repeal price-anderson), and compete in the marketplace against wind and solar, and pay for the carbon cost of building the damn thigns which is not insubstantial, and then, if they have a rennaissance, fine.
Hey Chicken Littles – Simmer down, the sky hasn’t fallen and doesn’t appear to be. Gas prices are a different story.
The NYT takes a sanctimonious tone??? There’s one I would never have seen coming.
To the Obama supporters – I understand the pathology/frustration that has driven you to support a candidate you basically know nothing about (none of us know much about him), but please remember, Bush got elected because people thought he was the guy to have a beer with. Making the same vote for the opposite team makes you just like the voters you claim to loathe.
Just sayin’…
another comment:
to those who continually call for the US to tap into ANWAR and other places that are currently restricted, have you thought that maybe, just maybe it is being saved for a REAL crisis [in case a real crisis comes along]…
4$/gallon consumer gas is not a crisis,
10$/gallon consumer gas is not a crisis,
it’s a crisis when the middle east says:
no more oil for you!!!
that probably won’t happen for 20+ years, so let’s hold off on using up ALL of ‘merica’s oil before then…
You letting Hannity ghost write for you these days?
But I like how suddenly because of McCain’s proposed gas tax holiday, free market uber-alles conservatives don’t get supply and demand.
Why do gas prices go up in the summer? Because there is more demand — supply can’t keep up with it.
Suspending the gas tax, would push up demand whie doing nothing to increase supply.
Therefor, gas prices would increase.
How much? We’d have to let the market decide.
Jonny Lieberman:
You letting Hannity ghost write for you these days?
No, I’m just channeling Sean. [BTW: You’re a great American, you commie pinko pistonhead bastard.]
Anyway, my take: less tax is good. As for the idea, make that fact that a tax cut wouldn’t offer much relief at the pump, so what? A precedent would be set that I could really support: less tax (see: above).
To the Obama supporters – I understand the pathology/frustration that has driven you to support a candidate you basically know nothing about (none of us know much about him), but please remember, Bush got elected because people thought he was the guy to have a beer with. Making the same vote for the opposite team makes you just like the voters you claim to loathe.
Of the three who are still running, O’bama at least has the courage of convictions on this one, which the other two decidedly lack. It is also clear from listening to him that O’Bama understands complex policy issues, which Bush obviously did not understand (it was painfully obvious in the debates), and probably still for the most part doesn’t understand.
less tax (see: above).
Yes, but also more potholes. In New Jersey, maybe also less mafia and corrupt politicians, but they’d find something else to profit of.
This is a dumb dumb idea, put out there simply to attract “dumb” voters. I don’t intend to insult, but we all know it is.
Hillary takes it a step further (she really will say ANYTHING to get a vote) by proposing a gas tax stoppage. This will get a good number of dumb voters to venture this way. Nevermind every other cost in their lives, saving $30 in gas taxes is a GREAT idea!
But to take it a step further and propose windfall taxes against the oil companies makes it even worse. They’re a business. We don’t HAVE to use their stuff. If I were them, I’d charge 50% profit margin. 10% is more than acceptable. You don’t think they’ll pass that along too? But beyond that, this allows Hillary to get voters who say “yeah! stick it to those evil oil companies!” without ever stopping to think for even a second how the whole fiasco would play out.
How would they feel when that bridge that needs rebuilding collapses and kills a few dozen people? Or even that rebar that sticks up destroys your car’s rims. Are you still gonna be happy for this $30 you saved in gas taxes??
Hmmm…so many posts and yet not one “Boo-Yeah it’s the Ron Paul Revolution!” Come on fellas, I’ve got like hundreds of these crusty old signs for this crusty old fella spread across my city. Surely his isolationist approach would reduce both consumption and emmisions…as we’d eventually run out of oil and start using ox-carts and such again. Oh wait, maybe that’s why there are no Ron Paul fans here. What is the 0-60 time for an ox-cart? Hmmm, maybe I’ll have to Tivo “Little House” today and crunch the numbers. Where’s my TI-83?….
With all this back and forth about how a gas tax repeal would help or hinder whatever the cause of the moment is, I’m surprised nobody has mentioned the obvious: every penny of the gas tax goes into the “General Fund” to be disbursed at the whim of the a**hole politicians in DC. Not one nickel of it is dedicated to infrastructure maintenance or improvement in any kind of permanent “superfund”.
I tend to believe that less tax is good, now if only the voters would learn to elect politicians who could actually learn how to spend less.
I personally think that the tax cut proposal is dumb pandering, but it should result in somewhat lower fuel prices.
Demand will not necessarily spike in response to a temporarily reduction in the price. Short-term demand is fairly inelastic, which means that price increases and decreases over short periods of time don’t do much to influence demand, either way.
A permanent tax cut would be a different matter entirely, because the market would adapt to that with different vehicle purchases and behavior. But a brief holiday should put some cash back into the pockets of drivers, with minimal effect on consumption.
That being said, Obama is showing some intestinal fortitude, and he deserves some respect for it. Instead of focusing on his former clergyman, he should be pointing at pictures of the bridge in Minneapolis, and reminding us of what happens when infrastructure is neglected.