Economists Slam Clinton-McCain gas tax holiday plan

WASHINGTON (Reuters) - A gas tax holiday proposed by U.S. presidential hopefuls John McCain and Hillary Clinton is viewed as a bad idea by many economists and has drawn unexpected support for Clinton rival Barack Obama, who also is opposed. . . .Economists said 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.

Link. According to Obama, the tax holiday "would last for three months and it would save you on average half a tank of gas, $25 to $30. That's what Senator Clinton and Senator McCain are proposing to deal with the gas crisis. This isn't an idea designed to get you through the summer, it's an idea designed to get them through an election."

It's only April. How crazy is the pandering going to get by November?

Not only that, it would strip money from the highway fund which we need for infrastructure maintenance. We need a real energy policy, not a decade old rehashed plan from Bob Dole.

Hello Edwin, didja get my PM with the pic?

P.S. on the topic: obviously, Obama is going to be slammed for his elitism again.

Gorilla.800.lbs wrote:
P.S. on the topic: obviously, Obama is going to be slammed for his elitism again.

I'm hoping he can keep firing home that people won't save any money with the plan and that it will hurt spending on infrastructure. On the positive side, when I was watching Good Morning America today they did a report on the competing views of the candidates and all but endorsed Obama's view. The reporter talking it over with Charlie Gibson said that every economist he had spoken with thought the plan wouldn't make any difference because of the oil companies' ability to raise prices. It's like taking the tax and giving it to the oil companies.

This sounds like it'd work just as well as those "gas strike" protests. By and large people aren't going to buy more gas because it's cheaper or less gas because it's expensive. They're going to buy as much gas as they need, because otherwise they're walking.

Anyone else seeing the word "plan" in the thread title as "pl an"? (formerly "idea" came up as "id ea")

Funkenpants wrote:
Anyone else seeing the word "plan" in the thread title as "pl an"? (formerly "idea" came up as "id ea")

Yup. Same here.

And Obama's right. It's just a bad idea. There's no easy, quick fix for gas prices. Unlike previous price spikes that were driven by insufficient refining capacity, this one is pretty clearly driven by oil prices, and as much as anyone would like, there's no magic switch for those, not even in Alaska.

In the long run, my preferred solution would be to restructure our society to get away from the necessity to drive everywhere. But if wishes were horses...

4dSwissCheese wrote:
Funkenpants wrote:
Anyone else seeing the word "plan" in the thread title as "pl an"? (formerly "idea" came up as "id ea")

Yup. Same here.

And Obama's right. It's just a bad idea. There's no easy, quick fix for gas prices. Unlike previous price spikes that were driven by insufficient refining capacity, this one is pretty clearly driven by oil prices, and as much as anyone would like, there's no magic switch for those, not even in Alaska.

In the long run, my preferred solution would be to restructure our society to get away from the necessity to drive everywhere. But if wishes were horses...

And the market-driven way to make that happen is to decrease demand by increasing cost (i.e.: the polar opposite of the McCain-Clinton plan). If you really want structural changes that reflect a direction toward sustainable energy policy, we need to start by taxing the hell out of gas to reflect true (i.e.: unsubsidized) costs. Then, perhaps, fcukwits will abandon their McMansions in Booneyville(tm) and stop driving their GMC Leviathans(tm).

The rest of us have been subsidizing that irresponsible behavior for far too long. They can cry all about the "relief", but they created the problem.

Gorilla.800.lbs wrote:
Due to a combination of other circumstances, some fundamental adjustments are already coming.
The times are upon us whereby:

* many families won't be able to buy three cars (or trucks or SUVs) for the family on a 5-year loan. Practices like back-to-back leases, as well as borrowing against one;s home equity or buy the next car are becoming unpractical fast.
* many families will begin feeling a reach pinch (as opposed just bitching at the pump) when filling said vehicles up.
* in the longer term, the suburban sprawl (and resultant over-reliance on personal transportation) will be held in check by a growing deficit of energy and/or water (in South and Soutwest). The insentives to build new subdivisions off of highways in Nevada and Arisona are already evaporating, without even having to consider the whole mortgage crisis thing.

Looks like the "pro growth" folks (i.e. greedy developers) that were screaming "socialism" whenever municipalities told them that they didn't have the infrastructure to accomodate the steady influx of born-again ruralists are out of luck now. They'll probably whine and moan about how they need tax relief or bailouts. I fear McClinton will give it to them.

Paleocon wrote:
4dSwissCheese wrote:
Funkenpants wrote:
Anyone else seeing the word "plan" in the thread title as "pl an"? (formerly "idea" came up as "id ea")

Yup. Same here.

And Obama's right. It's just a bad idea. There's no easy, quick fix for gas prices. Unlike previous price spikes that were driven by insufficient refining capacity, this one is pretty clearly driven by oil prices, and as much as anyone would like, there's no magic switch for those, not even in Alaska.

In the long run, my preferred solution would be to restructure our society to get away from the necessity to drive everywhere. But if wishes were horses...

And the market-driven way to make that happen is to decrease demand by increasing cost (i.e.: the polar opposite of the McCain-Clinton plan). If you really want structural changes that reflect a direction toward sustainable energy policy, we need to start by taxing the hell out of gas to reflect true (i.e.: unsubsidized) costs. Then, perhaps, fcukwits will abandon their McMansions in Booneyville(tm) and stop driving their GMC Leviathans(tm).

The rest of us have been subsidizing that irresponsible behavior for far too long. They can cry all about the "relief", but they created the problem.

I think if someone wants to buy the big cars, then that is fine. We don't need to demonize them. Prices going higher for oil is a good thing, it will make alternative sources more attractive and cost-effective. Too bad it's impossible to stop subsidizes once they start, it's too easy to trot out an old lady who lives on it.

Ulairi wrote:

I think if someone wants to buy the big cars, then that is fine. We don't need to demonize them. Prices going higher for oil is a good thing, it will make alternative sources more attractive and cost-effective. Too bad it's impossible to stop subsidizes once they start, it's too easy to trot out an old lady who lives on it.

I think, though, that it is occasionally fair to demonize folks who have made irresponsible decisions that have collective consequences. We had a good thing going with cheap gas until folks decided to game the system by using the collective fuel subsidy to live a lifestyle that none of us (including they) could afford in the long term. The "drive til you qualify" folks were effectively dumping their trash in a public park by doing so.

Just because they could do it doesn't mean they should have.

Ulairi wrote:
I think if someone wants to buy the big cars, then that is fine.

I agree with you here in general, since from a fuel usage standpoint there's no difference between someone who uses 750 gallons a year to travel 9,000 miles in a 12 mpg truck and a person who goes 18,000 miles in a 24 mpg sedan. The only downside to that attitude is when people are reluctant to get into a small car more suited to their needs over fears of getting wiped out in an accident with a bigger vehicle. I don't know how we handle that from a public policy standpoint.

Funkenpants wrote:
Ulairi wrote:
I think if someone wants to buy the big cars, then that is fine.

I agree with you here in general, since from a fuel usage standpoint there's no difference between someone who uses 750 gallons a year to travel 9,000 miles in a 12 mpg truck and a person who goes 18,000 miles in a 24 mpg sedan. The only downside to that attitude is when people are reluctant to get into a small car more suited to their needs over fears of getting wiped out in an accident with a bigger vehicle. I don't know how we handle that from a public policy standpoint.

Easy. Make people who want to purchase vehicles over 4500 pounds of gross vehicle weight obtain proper licenses that include more stringent testing. We make tractor trailer drivers test regularly. We should do the same for folks in their rolling meteors.

Due to a combination of other circumstances, some fundamental adjustments are already coming.
The times are upon us whereby:

* many families won't be able to buy three cars (or trucks or SUVs) on a 5-year loan. Practices like back-to-back leases, as well as borrowing against one's home equity to buy the next car are becoming unpractical fast.
* many families will begin feeling a real pinch (as opposed just bitching at the pump) when filling said vehicles up.
* in the longer term, the suburban sprawl (and resultant over-reliance on personal transportation) will be held in check by a growing deficit of energy and/or water (in South and Soutwest). The incentives to build new subdivisions off of highways in Nevada and Arisona are already evaporating, without even having to consider the whole mortgage crisis thing.

Fixed a bunch of typos.

Paleocon wrote:
Ulairi wrote:

I think if someone wants to buy the big cars, then that is fine. We don't need to demonize them. Prices going higher for oil is a good thing, it will make alternative sources more attractive and cost-effective. Too bad it's impossible to stop subsidizes once they start, it's too easy to trot out an old lady who lives on it.

I think, though, that it is occasionally fair to demonize folks who have made irresponsible decisions that have collective consequences. We had a good thing going with cheap gas until folks decided to game the system by using the collective fuel subsidy to live a lifestyle that none of us (including they) could afford in the long term. The "drive til you qualify" folks were effectively dumping their trash in a public park by doing so.

Just because they could do it doesn't mean they should have.

Again, if someone wants to make the bed we should let them lay in it. If they cannot afford it, we should not give them welfare or support their bad decision making. I don't think it is the governments job or my place to tell someone what type of home or car they wish to purchase. If we get rid of the handouts and take out the idea that we'll cover their losses, maybe they will not make those purchases. However, we should allow people who can to do so.

Funkenpants wrote:
Ulairi wrote:
I think if someone wants to buy the big cars, then that is fine.

I agree with you here in general, since from a fuel usage standpoint there's no difference between someone who uses 750 gallons a year to travel 9,000 miles in a 12 mpg truck and a person who goes 18,000 miles in a 24 mpg sedan. The only downside to that attitude is when people are reluctant to get into a small car more suited to their needs over fears of getting wiped out in an accident with a bigger vehicle. I don't know how we handle that from a public policy standpoint.

Fuel usage, no difference. CO2 emissions, big difference.

I've only know a handful of people that actually NEED an SUV (big family, etc.). Everyone else trots out the lame ass "I like to be high up/see everything" or the "I feel safer" excuse for why they drive an 8,000 lbs. vehicle to the grocery store. This triggers the "bigger is better" arms race. I drive a sedan and half the time I can't see anything on the highway because I'm boxed in by SUVs.

We have plenty of options from a public policy perspective. We have programs that encourage things we think are good for the country (homeownership, babies, etc.). We can easily add incentives and disincentives to steer people down a path that makes strategic sense for this country. Fuel efficient transportation choices get benefits. Ineffiecient choices, like SUVs and light trucks, get the stick.

Ulairi wrote:

Again, if someone wants to make the bed we should let them lay in it. If they cannot afford it, we should not give them welfare or support their bad decision making. I don't think it is the governments job or my place to tell someone what type of home or car they wish to purchase. If we get rid of the handouts and take out the idea that we'll cover their losses, maybe they will not make those purchases. However, we should allow people who can to do so.

To a large extent, I agree with you. The market does a marvelous job of discouraging some sorts of behavior. That said, the market also encourages behaviors that are clearly detrimental to us all at times. Free or shared resources, for instance are often mistreated or abused because doing so is often in an individual's narrow economic interest. Littering is a prime example. If it wasn't for littering ordinances, there would be a statisically average number of asshats who think it is their human right to turn your neighborhood into a craphole (just visit Taiwan if you have any questions).

Paleocon wrote:
Ulairi wrote:

Again, if someone wants to make the bed we should let them lay in it. If they cannot afford it, we should not give them welfare or support their bad decision making. I don't think it is the governments job or my place to tell someone what type of home or car they wish to purchase. If we get rid of the handouts and take out the idea that we'll cover their losses, maybe they will not make those purchases. However, we should allow people who can to do so.

To a large extent, I agree with you. The market does a marvelous job of discouraging some sorts of behavior. That said, the market also encourages behaviors that are clearly detrimental to us all at times. Free or shared resources, for instance are often mistreated or abused because doing so is often in an individual's narrow economic interest. Littering is a prime example. If it wasn't for littering ordinances, there would be a statisically average number of asshats who think it is their human right to turn your neighborhood into a craphole (just visit Taiwan if you have any questions).

I have been to Taiwan, three times. I didn't see a lot of litter but I was in a nice area most of the time. In YiLan, I did but that is old Taiwan..and I think in Dan Shui.

But, in Taibei City where my girl's family lives, it wasn't that bad.

Isn't it a tad disingenuous to argue simultaneously that the removal of the gas tax will both not save drivers any money and cripple the infrastructure funding?

Ulairi wrote:
Paleocon wrote:
Ulairi wrote:

Again, if someone wants to make the bed we should let them lay in it. If they cannot afford it, we should not give them welfare or support their bad decision making. I don't think it is the governments job or my place to tell someone what type of home or car they wish to purchase. If we get rid of the handouts and take out the idea that we'll cover their losses, maybe they will not make those purchases. However, we should allow people who can to do so.

To a large extent, I agree with you. The market does a marvelous job of discouraging some sorts of behavior. That said, the market also encourages behaviors that are clearly detrimental to us all at times. Free or shared resources, for instance are often mistreated or abused because doing so is often in an individual's narrow economic interest. Littering is a prime example. If it wasn't for littering ordinances, there would be a statisically average number of asshats who think it is their human right to turn your neighborhood into a craphole (just visit Taiwan if you have any questions).

I have been to Taiwan, three times. I didn't see a lot of litter but I was in a nice area most of the time. In YiLan, I did but that is old Taiwan..and I think in Dan Shui.

But, in Taibei City where my girl's family lives, it wasn't that bad.

Most of that has to do with the fact that the DPP started passing and enforcing environmental laws. If it were up to the "market", they'd still be selling leaded gasoline (like they were until 1999).

There is no arguing that the market does a masterful job of incenting certain behaviors. Capitalism is, by far, the most powerful economic driver we know of. That said, the naked capitalism many self styled libertarians seem to advocate would be a gigantic step backward. Folks forget, for instance, that the US in the 1900's looked a whole lot like China does today. And as much as I love the economic dynamism I experienced in Chinese speaking Asia, there is no way in hell I'd ever raise kids there.

Edwin wrote:
Not only that, it would strip money from the highway fund which we need for infrastructure maintenance. We need a real energy policy, not a decade old rehashed plan from Bob Dole.

I saw Clinton yesterday say we would make up for the reduced revenue by taxing the oil companies. This new tax on their profits would then pay for the infrastructure maintenance.

I'm not an economist but I'm not an idiot either. If you lower a tax on consumers and put it on the producers what do you think the producers are going to do? I'm guessing this would push the price of gas even higher.

I love it when presidential candidates propose solutions that my 9 year old son recognizes as idiotic.

The gas holiday is pandering, plain and simple.

OG_slinger wrote:
Fuel usage, no difference. CO2 emissions, big difference.

What's the difference in C02 emissions on a per mile basis?

Nosferatu wrote:
Isn't it a tad disingenuous to argue simultaneously that the removal of the gas tax will both not save drivers any money and cripple the infrastructure funding?

According to the economists, oil companies/gas distributors will simply raise prices to capture the value of the reduced tax. You can't force them to lower prices. And if they raise prices up to where the price would have been with the tax still in place, people will keep buying the gas anyway at the same price they already were paying. The 10-18 cents per gallon will just go into the companies' pockets rather than the government's infrastructure fund.

It's nice to see Obama opposing the tax holiday. Frankly, I was rather disappointed he didn't oppose the ridiculous $150B tax rebate mess as he seems like the only one of the 3 candidates with a tightly screwed on head.

Oh well, the tax holiday is really pure genius politically. It's an indirect windfall for your oil buddies, it looks like you're doing something for the Average American(tm) and has the side benefit of making your opponent look bad if they oppose it.

To me, a larger mystery is the whole necessity to "do something" about the whole "heavy driving summer season".

Is it such a financial burden on the America's working families indeed that there has to be something done about it? Where is that heavier driving pattern coming from anyway?

One would normally posit that because of the warmer temperatures, more people would actually be able to enjoy walking for the casual distances, so they're actually able to drive less. Is it because of the vacationing period? Well, if so, why does the government need to get involved into budgeting people's pastime? Is there some culturally ingrained justification which I am still not catching, being an immigrant? Come June, does a statistically significant part of American population hit the road on some form of an obligatory interstate Haaj?

Or there are some objective, physics-based drivers out there? Do the highway distances somehow swell and elongate under the warmer sunrays? Does the vehicular mpg fall very much during summer (it actually does, but we don't feel it much in comparison to cooler seasons, because the winter mileage itself is hobbled by the seasonal emission-reducing additives).

The proposition sounds even more puzzling, considering that other periods of heavy travel (say, Christmas or Thanksgiving) aren't getting any love like that. What's more, if the alternative modes of transportation are considered -- specifically, air travel -- the prices are easily doubling for the summer period, actually, but there doesn't seem to be any legislative momentum to suspend the collection of federal taxes on air travel during the summer period...

[Clinton] vowed to break the monopoly of the Organization of Petroleum Exporting Countries (OPEC), cartel which produces 40 percent of the world's oil. "I am tired of OPEC setting the price and determining how much supply there is, by any definition that is a monopoly," Clinton said.

"We are going to use every tool at our disposal as a nation to try to break that up."

Link. You know, I hate to sound all elitist here, but you have to be downright stupid or ignorant to buy into what she's selling. Break up OPEC using "every tool at our disposal"? I have the feeling she's sending out a dog whistle to the knuckle-dragging crowd suggesting that she'd happily bomb all the brown people until they start handing over their oil.

She is assuming that all Americans are ignorant. That in itself is enough for me to want her out of the race.

Mayfield wrote:
She is assuming that all Americans are ignorant. That in itself is enough for me to want her out of the race.

Well....it will work. It's why populism works with a large swap of the population.

McClinton is looking more and more like an extension of the Shrub with every utterance it makes.

Ulairi wrote:
Mayfield wrote:
She is assuming that all Americans are ignorant. That in itself is enough for me to want her out of the race.

Well....it will work. It's why populism works with a large swap of the population.

Wait, are you comparing populism with pandering?

Mayfield wrote:
Ulairi wrote:
Mayfield wrote:
She is assuming that all Americans are ignorant. That in itself is enough for me to want her out of the race.

Well....it will work. It's why populism works with a large swap of the population.

Wait, are you comparing populism with pandering?

That's exactly what I'm doing.

Ulairi wrote:
Mayfield wrote:
Ulairi wrote:
Mayfield wrote:
She is assuming that all Americans are ignorant. That in itself is enough for me to want her out of the race.

Well....it will work. It's why populism works with a large swap of the population.

Wait, are you comparing populism with pandering?

That's exactly what I'm doing.

I don't think they need to be one in the same. If populism is to be used in a political neutral manner, it usually means to appeal to the interests of the majority. Pandering, otoh, seems more about appealing to the baser instincts or ignorance of the masses.

By way of illustration, The 1944 Serviceman's Readjustment Act (otherwise known as the GI Bill) allowed returning soldiers and sailors from WW2 the ability to go to college or purchase houses. This was one of the biggest transfer payments in American history and appealed to the interests of the majority. Populism? Yes. Pandering. I think not.

There are plenty of examples of pandering with handouts to be sure, but one doesn't need, necessarily, to be populist to pander either. The highly successful propaganda campaign to repeal the inheritance tax as some kind of ghoulish "death tax" on middle income Americans was a classic example of pandering.... and lying.