Wednesday, April 30, 2008

It May Be a Gimmick...But If It Gets Votes


The whole gas tax "holiday" or "moratorium" or whatever we are calling it today may indeed be a "gimmick" as Sen. Obama says. It may also play well with the American public.

The Los Angeles Times has one column critical of the whole proposal. It even includes specific reasons that Sen. Obama may be hostile to the proposals of Sen. Clinton and Sen. McCain.

Sen. Barack Obama (D-Ill.) is refusing to play along with what he has called a gas-tax "scheme,” perhaps because he has learned from experience. When he was an Illinois state senator in 2000, he voted in favor of a six-month suspension of the state's sales tax on gasoline. A study later showed that the state lost $175 million in revenue, and consumers barely benefited -- gas prices simply rose to make up for the tax cut. Any economist could have predicted this: If you lower the price of gas without increasing the supply, it will only raise demand and thus boost prices.


Marc Ambinder has a post in The Atlantic that has reasoning from economist Jonah Gelbach on why all of this won't work.

Despite all of this, do you really think the idea of a "Gas Tax Holiday" is going to go away? Hell no! It sounds too good to too many Americans. It sounds good to conservatives and libertarians who hate taxes anyway. It sounds good to poor Americans who can't afford gas from week to week. It sounds good to middle class Americans who also can't afford gas from week to week.

Opposing the idea on the grounds that it is just a smoke screen is all well and good in and of itself but it won't matter to these people. A "Gas Tax Holiday" is going to be a popular idea. Senator Obama should get on board and shape it rather than oppose it. For instance, if Senator Clinton's plan goes forward, it will, allegedly, be revenue neutral while Senator McCain's plan will add to the deficit.

You aren't going to stop it. You might as well limit whatever damage might occur from all of this. Meanwhile, you are supporting a popular, if empty, position. Keyword: Popular. It may be stupid, but if it gets you votes than what the heck are you doing?! JMHO.

Comments welcome,

Pat McGovern

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