John McCain, on Tuesday:
“I propose that the federal government suspend all taxes on gasoline now paid by the American people — from Memorial Day to Labor Day of this year. The effect will be an immediate economic stimulus…. [B]ecause the cost of gas affects the price of food, packaging, and just about everything else, these immediate steps will help to spread relief across the American economy.”
John McCain, on Thursday:
“I think psychologically, a lot of our problems today are psychological — confidence, trust, uncertainty about our economic future, ability to keep our own home. [A gas-tax holiday] might give ’em a little psychological boost. Let’s have some straight talk: it’s not a huge amount of money…. A little psychological boost. That’s what I think [a gas-tax holiday] would help.”
So, which is it, a seasonal tax cut that will serve as “an immediate economic stimulus,” or a gimmick to alleviate our “psychological” problems?
And speaking of McCain’s psychological ploy, Kate Sheppard had a good item on the subject this morning.
The real failure of McCain’s policy is that it fails to offer any alternatives for consumers, and without those, Americans will remain wed to ever-more-expensive gasoline. Avent offers up mass transit expansion and congestion pricing as two means of helping wean people off gasoline. I’d offer another. McCain has said he is opposed to creating subsidies and tax incentives to develop the green economy.
He does, however, support massive subsidies for the nuclear industry, which he included in his climate legislation and has advocated for adding to the Lieberman-Warner bill. Nuclear is the sum total of his renewable energy plan, as far as I can tell, and that wouldn’t do anything to wean us off gasoline. Rather than cutting the gas tax as a short term (and insignificant) solution to economic woes, we should be investing those taxes in real, long-term solutions to the country’s energy problems, but there’s little indication that McCain, despite the green mythology surrounding him, has the foresight to commit to that.
As did Ryan Avent.
How badly does the tax holiday plan fail? Let us count the ways.
First, it will offer consumers little help at the pump. In just the past year, gasoline prices have risen about 25 percent on average, dwarfing the 18.4 cent federal tax. Given recent oil price movements, it’s not impossible (and perhaps likely) that fuel costs will have jumped by the full amount of the tax between now and Memorial Day. There’s simply not enough tax to remove to make fuel costs less painful for consumers.
Second, given the fact that the average consumer would scarcely notice the price difference from a suspended tax, the budget cost is unacceptable. America’s transportation trust fund is low enough as it is. Cutting out a key source of revenue for a period of several months is a highly irresponsible decision.
And third, this demonstrates a total lack of seriousness about climate issues on McCain’s part (though it’s unlikely his “green conservative” reputation will suffer for it). It should be clear that any effective policy to reduce carbon emissions will increase the price of fossil fuels. This is unavoidable — indeed, it’s precisely the point of those measures. McCain is clearly willing to compromise on climate issues when political advantage is available, and we have every reason to believe he’ll do so in office.
Yeah, but other than these, it’s just swell.