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Temporary Suspension of the Gas Tax in the U.S.

4127 Views 40 Replies 21 Participants Last post by  Xusein
Republican nominee John McCain and Democratic Candidate Hillary Clinton have proposed a suspension of the gas tax during the summer. Barack Obama opposes it (thankfully). This is an unbelievably dumb idea and is apparently every single expert whether they are libertarian, conservative, or liberal opposes it. Even the transport unions and truckers association oppose it!

Over the past several days, some of the nation's leading economic and political pundits have weighed in critically on the proposal of both Sens. Hillary Clinton and John McCain to institute a gas tax holiday this summer.

Paul Krugman of the New York Times said on Tuesday that Clinton's idea, while less "evil" than McCain's, was still "pointless" and "disappointing."

One day later, Tom Friedman, also of the Times, called the idea "so takes your breath away."

And Jonathan Alter of Newsweek piled on: "Hillary Clinton has now joined John McCain in proposing the most irresponsible policy idea of the year -- an idea that actually could aid the terrorists."

Surely, however, there must be someone out there not associated with a politician or a candidate who supported the idea of a gas tax reprieve -- especially if, as Clinton suggests, it would be paid for by an excess profits tax on oil companies.

I emailed Howard Wolfson, Clinton's spokesperson, asking him to put me in touch with an economic or environmental analyst who favored his boss' plan. He never wrote back.

So I took the task upon myself. I would call experts from all sides of the ideological aisle to get a sense of where the debate stood. In the end, every single analyst I surveyed judged the gas tax holiday proposal to be, roughly speaking, a silly, superfluous, or outright pandering idea.

I started with what I thought would be my best shot, the libertarians. Jerry Taylor, a fellow for the Cato Institute, unfortunately, called the proposal a "holiday from reality."

"What would happen more likely than not, gas taxes would be cut, but pump prices wouldn't go down, service stations would just continue charging what they are charging," he said. "I'm a Libertarian and I don't mind that. But you might not be a Libertarian and you might believe the federal treasury needs that money... Now if this were a permanent reduction of the tax, I would be all for it."

Alright, one "no." Perhaps the free-marketers would be of a different ilk. I was wrong.

"I think it is close to political pandering," said Max Schulz, a senior fellow at the Manhattan Institute. "It is bad policy and political gimmickry. If you want to deliver relief to folks you have to do more than just this little holiday from the gas tax. You have to address what is driving the price of crude oil, even problems with the weak dollar. You aren't going to win any points doing that, however. But you will get points if you get up and say let's suspend the gas tax for a few months... I never have seen the wisdom of playing gimmicks games of the tax code."

Who, I asked, would favor the proposal? "Political advisers to candidates," was Schulz's response. "It is entirely due to the focus of the presidential election coinciding with the summer."

From Schulz, I moved on to the conservative crowd. But Ken Green, an energy expert for the American Enterprise Institute, ended up being similarly dismissive.

"There would be economic sense in eliminating the gas tax completely and replacing it with tolls. That would make sense," he said, "but if you remove the tax now, the things being funded with the money will still need funds. Or it will be funded with taxpayer's dollars from other things. So it will be less at the pump and more in your tax bill."

He went on: "All of these candidates claim to be environmentally conscious people, so what do they want to do? Lower the cost of driving in the summer time when it is the highest demand in the first place."

"I'm afraid," he summarized, "that your record is going to be unbroken in terms of finding someone who will like this idea."

Sigh. I tried my hand with the progressive wing of the ideological spectrum. There too, however, the idea of a gas-tax holiday was dismissed as ineffectual and publicity-driven.

Bob Sussman, an energy analyst with the Center for American Progress, and, for full disclosure, a supporter of Barack Obama, saw little benefit or popularity to either Clinton or McCain's proposal.

"Rather than indiscriminately suspending the gas tax, if we have a revenue source here to help people in need, we out to target the money to people who really need it. And if you suspend the gas tax you are giving a small break to every body instead of a significant break to the people pinched by the high prices," he said. "They might appreciate a small economic break. But I haven't heard anyone clamoring for this."

But Sussman offered a glimmer of hope. He suggested I might be able to find support from transportation workers, unions and organizations.

So I tracked down Roger Tauss, the International Vice President for the Transport Worker's Union, which supports Obama but would, nevertheless, stick to its issues. The results were more of the same.

"It is crazy," he said. "There is a bunch of different reason it is crazy and all the economist are saying it is nuts. First of all it is pocket change and it doesn't do anything short term. It will just put more money in the oil companies pockets. It is typical Washington beltway crap. It is just like typical. They make a big fight over a small, nothing issue, and nothing will ever get done."

Finally, I got a quote from Robert Shapiro, formerly the undersecretary of commerce in the Clinton administration and the author of "Futurecast." An independent voice with ties to the former first lady, however, did not give the expected results.

"Stated as clearly as I can," he wrote, "it's utterly misguided both environmentally and economically. Environmentally, it does actual harm, since it reduces the price of producing greenhouse gases. And economically it's trivial or worse -- by reducing the price of driving it encourages more of it, thereby increasing demand for gasoline, which inevitably pushes the price back up - the consumer gains nothing, and the oil companies and OPEC collect the extra bucks instead of the government."

UPDATE: Even the American Trucking Association, the group the Clinton camp says is most favorable to it's idea, offers a tepid thanks but no thanks. From the group's spokesperson:

ATA appreciates the effort and supports the proposals. But we do have concerns that any fuel tax suspension proposal could damage the already ailing Highway Trust Fund. To the extent that McCain and Snowe's proposals use general revenue funds to offset the hit to the trust fund, that concern is addressed. ATA did not ask for this legislation. And we believe it is only a very short term answer that does not do anything to address the longer term issue of rising fuel prices. ATA recognizes that rising fuel costs have a disproportionate impact on small trucking companies where even a small savings can be the difference in their staying in business.

Clinton, it should be noted, would not pay for the tax break from the Highway Trust Funds. But the message seems the same: this is not the answer needed.
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Here in germany is also a discussion about the suspension of the gas tax. Especially the so called 'ecological tax' is highly discussed.
No way this would work, unless you do it forever. I'm all for cheaper gas, but this is just gonna make it hurt that much more when the tax is reinstated.
This move would be incredibly foolish and is populism at it's worst.
Very stupid move indeed. Perhaps suspend it for freight and logistics or offer increased subsidies for those industries, but not for the average person. Why not invest the taxation into alternative transit rather than hording it and building more roads?
We all know the oil companies won't ever dare to raise their gross prices to compensate for this drop. And then add on the tax when it's reinstated.
Very stupid move indeed. Perhaps suspend it for freight and logistics or offer increased subsidies for those industries, but not for the average person. Why not invest the taxation into alternative transit rather than hording it and building more roads?
Because the US government is filled with whores. Whores of the oil industry.
Suspension of the gas tax is just another short-sighted example of trying to borrow from the future. Sure, we all hate paying more for anything. But the reality is that the global consumption of gasoline has been soaring even as the easily accessible oil reserves have been diminishing. Just a generation ago, everybody in China got around on bicycles. The only cars in China were for a few state bigwigs. In a few decades, maybe less, China will have as many cars as the US. Which I guess is only fair considering they have four times our population. Much the same trends are happening in India, etc. So with all the competition for oil, sure prices are going to go up. The Europeans & Japanese have been paying more than what we're paying now for decades. At least the high gas prices have driven many of those SUVs off the road & gotten more Americans using public transit. Maybe that might discourage countries like China from following our wasteful example.
It's $0.184 per gallon. This isn't going to make a huge difference anyway! Who's really going to be jumping up an down to be paying $3.61 instead of $3.79??? That's not going to be a huge windfall.

Of course we'll all feel it when those billions of dollars in funds stop going towards keeping up our already rough roads.
LOL, the gas in the closest station to my place would be an inexpensive $3.71!

I'd start driving heavily again and screw public transportation! :happy:

Goddamn it I hate living in the Bay Area. Even with 18 cents off, I'm still gonna be getting my gas for 3.81...
Very stupid move indeed. Perhaps suspend it for freight and logistics or offer increased subsidies for those industries, but not for the average person. Why not invest the taxation into alternative transit rather than hording it and building more roads?
The problem is twofold. The roads in most of the places in the US are crap, and maintenance actually takes priority. Also, the way communities have been built in the last 60 years simply makes public transit infeasible, since the houses are spread very, very far apart, and to provide for car-less, frequent, and convenient public transportation over such vast expanses requires astronomical amounts of money.
A few months ago people cared about repairing bridges that might fall down Minneapolis-style. Now they seem to have forgotten.
Short term solution to appease the voters when a long term solution is far more important and urgent.
We've got the same stupid discussion here in New Zealand with the introduction of a regional petrol tax required to electrify our train system in Auckland being suspended, and another tax required for our proposal emissions trading scheme being pushed back from 2009 to 2011.

Surely, at least on this forum, we realise that the rising cost of petrol is actually going to benefit everyone in the long run as we (hopefully) break away from our auto-centric culture. Take a read of Asphalt Nation by Jane Holtz Kay. It basically concludes that no matter what fuels our cars, the automobile has had an unpredecently negative effect on our cities. If higher petrol prices can break our auto-dependence and actually lead to more sustainable planning techniques with a great reliance on public transport then BRING IT ON.

In any case, any benefits from tax reductions are just going be eaten up as prices increase in the long-run anyway. And once you knock off a tax good luck ever bringing it back.
This proposal is probably dead after Hillary Clinton did much worse than expected in yesterday's primaries in North Carolina and Indiana. It didn't help her politically, expect this idea to die off in the next few days.
She disappointed me on this issue.

Yes, read Asphalt Nation!
The way the US has developed in the past 60 years means that public transit is never going to work well in those areas. If you want more transit and less car dependency, you should concentrate on new development and designing that with transit in mind imo.

Of course there are some cities that suit subways, buses and trams and there are corridors where intercity rail would work well but they are exceptions I think rather than the norm.

Trying to build transit into neighbourhoods designed for the car is just going to mean very large subsidies being required for a service that will never be entirely satisfactory. Better in these places to concentrate on lower pollution cars, car sharing, not building any more sprawl than already exists etc.

And no, temporarily reducing the gas tax is just a populist move for election season that won't do any good in the long term.
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