Gas Tax Gimmicks

Today House Majority Leader Steny Hoyer (D-MD) sided with Obama in opposition to a summer 'tax holiday' recently proposed by McCain and Clinton to alleviate the brutal impact of rising gas prices. Though 'reducing the federal tax on oil' sounds nice to citizens, it fails to get to the heart of the energy crisis our nation is facing. Without investing in research and development of new energy sources, we are doomed to cope with rising gas prices for years to come.

Friedman summed up the trouble with the policy in the NYTimes today. "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."

Obama did not go so far as to call it money laundering, but he did call them out for their election year gimmicks. "This is the problem with Washington. We are facing a situation where oil prices could hit $200 a barrel. Oil companies like Shell and BP just reported record profits for the quarter. And we're arguing over a gimmick to save you half a tank of gas over the course of the entire summer so that everyone in Washington can pat themselves on the back and say that they did something... This isn't an idea designed to get you through the summer, it's an idea designed to get them through an election."

Most economists and environmental scientists side with Obama's position on this. The tax holiday will not provide substantial relief to buyers at the pump, and instead would act simply as a subsidy to oil companies- who are making record profits already.

RK quoted Gilbert Metclaf, a economics professor at Tufts University currently working with the National Bureau of Economic Research, as saying "I think it is a very bad idea... If we want people to invest in energy-saving cars, we need some assurance that the higher price paid for these cars is going to pay off through fuel savings. It is a very short-sighted, counterproductive proposal."

Friedman later points out the real crisis- a lack of creative energy and political will to invest in the larger problem at hand. The McCain-Clinton proposal is a reminder to me that the biggest energy crisis we have in our country today is the energy to be serious — the energy to do big things in a sustained, focused and intelligent way. We are in the midst of a national political brownout.