It’s one thing for a good presidential candidate to embrace a bad idea. It’s worse when the candidate knows it’s a bad idea. It’s worse still when the candidate attacks her rival for failing to embrace a bad idea. And it’s the worst when the candidate feels so strongly about the bad idea that she starts running television commercials about it.
And that, unfortunately, is exactly what we have in the case of Hillary Clinton and the “gas-tax holiday.” Her campaign unveiled a new TV ad yesterday in North Carolina and Indiana attacking Obama for not supporting a temporary suspension of the 18.4-cent federal gas tax.
After mentioning Clinton’s plan to temporarily freeze foreclosures, the announcer in the ad tells viewers, “Now gas prices are sky rocketing and she’s ready to act again. Hillary’s plan: use the windfall profits of the oil companies to pay to suspend the gas tax this summer. Barack Obama says no again. People are hurting. It’s time for a president who’s ready to take action now.”
I don’t doubt that Clinton’s focus groups found all of this quite compelling. People are livid over gas prices, and if Clinton tells them she’s going to cut the price by lowering a tax when families are most likely to be driving more, they’re very likely to respond well.
But Clinton’s proposal has no merit, and would probably do nothing but boost the profits of oil companies. Clinton, an incredibly smart, detail-oriented policy wonk, no doubt knows this, but cynically hopes to score a few points with an awful.
It’s rather transparent demagoguery. Worse, it’s crude and cheap demagoguery.
Harvard economist Greg Mankiw noted yesterday, “I don’t know any prominent economist who favors this McCain-Clinton proposal. More common is the reaction of a friend of mine (a veteran of the Clinton administration) who calls the idea ‘ludicrous.'”
Paul Krugman, usually a rather enthusiastic Clinton supporter, explains:
Why doesn’t cutting the gas tax this summer make sense? It’s Econ 101 tax incidence theory: if the supply of a good is more or less unresponsive to the price, the price to consumers will always rise until the quantity demanded falls to match the quantity supplied. Cut taxes, and all that happens is that the pretax price rises by the same amount. The McCain gas tax plan is a giveaway to oil companies, disguised as a gift to consumers.
Is the supply of gasoline really fixed? For this coming summer, it is. Refineries normally run flat out in the summer, the season of peak driving. Any elasticity in the supply comes earlier in the year, when refiners decide how much to put in inventories. The McCain/Clinton gas tax proposal comes too late for that. So it’s Econ 101: the tax cut really goes to the oil companies.
The Clinton twist is that she proposes paying for the revenue loss with an excess profits tax on oil companies. In one pocket, out the other. So it’s pointless, not evil. But it is pointless, and disappointing.
Thomas Friedman added that 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.”
It is great to see that we finally have some national unity on energy policy. Unfortunately, the unifying idea is so ridiculous, so unworthy of the people aspiring to lead our nation, it takes your breath away. 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.
When the summer is over, we will have increased our debt to China, increased our transfer of wealth to Saudi Arabia and increased our contribution to global warming for our kids to inherit.
No, no, no, we’ll just get the money by taxing Big Oil, says Mrs. Clinton. Even if you could do that, what a terrible way to spend precious tax dollars — burning it up on the way to the beach rather than on innovation?
The McCain-Clinton gas holiday proposal is a perfect example of what energy expert Peter Schwartz of Global Business Network describes as the true American energy policy today: “Maximize demand, minimize supply and buy the rest from the people who hate us the most.” Good for Barack Obama for resisting this shameful pandering.
Alex Koppelman reminds me that “political campaigns are rarely about the actual merits of policy proposals.” That’s painfully true. Demagoguery works. Playing on voters’ fears and ignorance works. Confusing the public with bad ideas that sound good works.
But I really don’t think Clinton wants to win this way. She’s smarter and better than cheap pandering.
Worse, all of this reinforces Obama’s argument that he’s more honest, principled, and willing to tell people the truth, even when they don’t want to hear it. Obama wants to present himself as a “different kind of politician,” and Clinton’s gas-tax attacks are making it easier for him to do so.
I’m absolutely certain that McCain and Clinton know full well this gimmick wouldn’t do anything to help consumers, and may actually make matters worse by encouraging consumption, pushing prices higher.
They know this, but are pushing the idea anyway, hoping, cynically, that it will pay political dividends anyway. What a shame.