After being a sleeper story for the last few weeks this just in, Hillary Clinton supports McCain’s gas tax holiday, “but Sen. Barack Obama says the plan is a quick fix that would do more harm than good.” Thank you Barack for being smart and not just latching on to a popular idea that is actually awful. Obama described the tax holiday as a “political scheme that would save the average driver $25 to $28. ‘It’s typical of how Washington works — let’s find some short-term, quick fix, even though we’re not really doing anything.'” Now lets look at what Clinton said:
Clinton, who rejected a similar idea in 2000, said her plan is different from McCain’s. She said the Republican’s proposal would cost the government up to $10 billion — money that is used to improve roads.
Well, at least she realizes what the costs are, something McCain failed to mention at all. Does that give her points? She, would close this shortfall with a “‘windfall profits tax’ on oil companies, meaning their profits over a certain amount would be subject to a 50 percent tax.” Obama is also purposing such a windfall tax. I’m not sure how I feel about this idea. Oil companies need ridiculously huge profits (in strict dollar amounts) to pay for the ridiculously high costs of exploring and drilling in new oil fields. So one would need to set that amount as very high absolute number or risk destroying the oil market by making it unprofitable for all players.
Clinton would use the money from the windfall tax to improve roads covering the shortfall created by the tax holiday. Obama would use it to subsidize gas purchases for low income families, eliminating the need for the holiday. Obama’s plan seems reasonable on the surface. It seems like it would really help people who probably need it most, as opposed to the tax holiday which helps every currently living American out in a very tiny amount. The tax holiday doesn’t help future generations, but then subsidized gas for any segment of the population fails that test as well. In the end this is just another reason dumb people will vote for Clinton and screw the country. Do I sound disillusioned yet?
More on this from a day late msnbc article:
Many economists implicitly agreed with Obama and said the McCain-Clinton gas tax plan sent the wrong signal on energy efficiency and was at odds with their pledges to combat climate change by encouraging lower U.S. carbon emissions.
“I think it is a very bad idea,” said Gilbert Metclaf, a economics professor at Tufts University….
Economists also saw it is a poor way of getting money to the households that need it most and warned that it might end up in the cash tills of the oil companies.
“If you want to provide households tax relief, a direct rebate … is more effective. Not all of the tax relief from a gas tax holiday will be passed on to consumers. Some will likely be kept by refiners,” Mankiw said
That part, which is at the end of the article really helps sell me on Obama’s plan, which I originally viewed some skepticism. I really should start reading mankiw’s blog like Rob does.