Sen. McCain: In need of econ 101
Presidential candidate John McCain is calling for a Memorial Day-to-Labor Day moratorium on collecting the 18.4 cent-a-gallon federal gasoline tax and 24.4 cent-a-gallon federal diesel tax.
Yes, gasoline is very expensive. The price for one barrel of light, sweet crude hit $114.08 on April 15. The national average for a gallon of gasoline is $3.386; diesel is $4.119 per gallon. And yes, prices will increase as more refineries move to summer-blend gasoline, a lower evaporation formula that causes less air pollution (for more on blended gasoline, check out this Slate article.)
But reducing the cost of gasoline by reducing or eliminating the federal tax is a phenomenally bad idea.
First, the gasoline and diesel tax supports the Highway Trust Fund (HTF). The HFT, which is supposed to provide monies for maintenance of federal highways and bridges -- like the one that collapsed in Minnesota -- is already so anemic that the National Transportation Policy and Revenue Commission called for a 40 cent increase in the gas tax over five years.
Second, McCain seems to be of the "tra-la-la, I can't hear you" school of thought when it comes to the budget. To make up for the estimated $8.5 billion in losses from eliminating the gas tax, he's suggested raiding general treasury funds.
Third, basic economics tells us that when the cost of something goes down, demand goes up. Summer is traditionally a busy driving season and making gasoline cheaper will encourage consumers to use more.
Do we really want to be encouraging more driving during the summer? Summer generally means higher ozone levels. Higher tropospheric ozone, the kind that forms nearer to the ground on hot and sunny days, is bad for human health, causing respiratory ailments and aggravating asthma. Many cities try to cope with high ozone by issuing "Code Red" or "Code Orange" days during which the advise residents to limit outdoor activity and/or reduce the cost of public transit.
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Reader Comments (Page 1 of 1)
4-16-2008 @ 7:37PM
Allen said...
Let's not kid ourselves into thinking that a green-centric interpretation of issues allways obtains the best solution, and especially not the best economic solution.
The economy is seriously faltering and McCain's suggestion of a gas-tax moritorium reflects the viewpoint that an economic stimulus is more important right now than theses other issues. This point is ignored in the commentary above and thereby turns the article into a self-parody of it's own title.
I think McCain's stimulus idea is probably welcomed by many Americans, especially those who are worried about losing their jobs or who are looking for jobs.
And to imply that McCain is not cognizant of the budget deficit problems ignores his long-standing position on eliminating earmark spending. One thing McCain has long shown to be is someone who is deeply concerned with the budget deficit, and that is obvious from his record in the senate.
I also think the obviously politically biased views of the blogger(s) on GreenDaily are tiresome, mean-spirited and off-topic. I don't think that Greendaily should be a semi-political blog, and the rather regular attacks on republicans are just nonproductive.
The GreenDaily writers should start a separate political blog if that is what they want to focus on.
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4-26-2008 @ 6:11PM
Melissa said...
Allen,
I understand that cheaper gas will, at least in the short term, help Americans in dire financial straits. But, in the long-term, it will hurt. The money that should be coming from the tax has to replaced somehow -- more deficit spending, increased taxes down the line, or an even more decrepit infrastructure.
McCain has taken a stand against earmarks but they are a remarkably small percentage of federal spending. I wish he'd address some of the larger issues -- namely how he plans to keep spending on defense while maintaining the 2003 tax credits and without raising other taxes.
As for bias: I write on issues that are currently in play before Congress. I have criticized both Rs and Ds in my posts.
4-16-2008 @ 11:04PM
Andrew said...
Allen,
Here are some other reasons the gas tax is a horrible idea.
http://climateprogress.org/2008/04/15/is-the-gasoline-tax-regressive/
http://climateprogress.org/2008/04/15/mccain-reveals-cynicism-hypocrisy-with-call-for-summer-gas-tax-holiday-energy-budget-freeze/
And one quick question of my own. How to we expect to create a stable, growing economy with 9.4 Trillion dollars of debt?
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