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Wednesday, April 30, 2008

On Hillary’s Gas-Tax “Holiday”

posted by on April 30 at 9:59 AM

Annie asked yesterday what I had to say about Hillary Clinton’s support for a so-called “gas tax holiday”—implying that my silence on the subject meant that I, as a Clinton supporter, was simply ignoring the proposal.

As I mentioned then, I’ve been swamped putting out the paper. But, Annie and Obama supporters shouldn’t take my silence (on this blog, at least) as tacit support for a gas-tax holiday.

As I said when McCain first proposed the “holiday,”

First, McCain says his proposal will reduce gas prices. The problem is, the federal gas tax isn’t why prices are so high (high enough that, for the first time in recent memory, people are starting to drive a little less); the reason gas prices are high is because the price of oil is $113 a barrel—a record level. The nationwide average price for a gallon of regular gas is $3.40 a gallon; cutting that price by 18 cents amounts to a five percent reduction. Put another way, the savings for a typical driver—one who drives about 12,000 miles a year—would be less than $28, or about half the price of a tank of gas. If that’s the tax cut that’s supposed to trickle down to ordinary Americans in the form of cheaper goods, food, and packaging, good luck even noticing it.

Not that McCain’s “trickle-down” thesis makes any sense in the first place. The “tax holiday” he’s talking about, after all, is only three months long. The economy is unlikely to respond to such a short-term reduction—especially if gas prices continue to increase. In fact, economists say that reducing prices actually stimulates consumption, triggering even higher prices. That “tax relief” isn’t going to be very comforting when you’re paying $4.00 a gallon.

Fortunately, that gas tax isn’t paying for anything important, right? Oh, just the Highway Trust Fund, which pays to fill potholes, fix crumbling roads and bridges, and patch up America’s failing highway infrastructure. Oh, yeah, and it’s running out of money already; currently, the trust fund faces a $2-$3 billion deficit. McCain says he’ll fill the gap by taking money out of the nation’s general fund. That’ll increase the deficit, but whatever—when you’re already $410 billion in the hole, what’s another $8 to $10 billion?

Now, Clinton’s gas-tax holiday scheme differs from McCain’s in a few respects: Unlike McCain, she would pay for the proposal by taxing windfall oil company profits and closing tax loopholes that benefit oil and gas companies. She wouldn’t dip into the Highway Trust Fund. And she addresses some of the actual reasons gas prices are at record highs: America’s refusal to dip into oil reserves, and OPEC’s stranglehold on oil production.

Regardless of those differences, Clinton’s plan to cut gas taxes temporarily suffers from the same flaws as McCain’s: It would provide only minimal “relief” and could lead to increased gas prices in the long (or even medium) term. Cutting gas taxes temporarily is no solution to increased fuel prices or to the economic woes of ordinary Americans.

OK. That said, there are huge differences between McCain and both the Democrats on energy issues; focusing on ONE dumb proposal by either of the Democratic candidates ignores the huge gulf in energy policy between both Clinton and Obama and McCain. It’s a “gotcha!” move that equates two policies that are very, very different and ignores all the occasions when Obama has made equally pandering moves.

Where were Obama supporters when he took tens of thousands of dollars from the Exelon (nuclear power) Corporation, and subsequently helped kill an amendment in Congress that would have spiked millions of dollars in loan guarantees for the company—loans that Taxpayers for Common Sense and Citizens Against Government Waste called “one of the worst provisions in this massive piece of legislation”?

Where were Obama supporters when he backed Joe Lieberman over Ned Lamont, contributing $4,200 to Lieberman’s campaign?

Where were Obama supporters when he pushed big subsidies (including the “Obama amendment,” offering oil companies a 50 percent tax credit for building gas stations offering the E85 ethanol blend) for corn ethanol production in Congress—calling corn ethanol “a clean, renewable, and domestically produced alternative fuel”? For that matter, where were they when he voted for 2005’s corporate-welfare energy bill?

Where were Obama supporters when he backed “clean” coal initiatives as part of the “clean energy revolution”?

Where were they when he enthusiastically picked up an endorsement from Big Coal’s biggest lobbyist?

I’m not saying you can judge a candidate by a single dumb position taken in isolation. Quite the opposite: By judging Clinton on one stupid, pandering policy point—the pointless, idiotic, probably harmful gas-tax holiday—Obama supporters ignore the huge gap between EITHER of the Democratic candidates and McCain on energy policy.

And if you don’t believe me, check out McCain’s speech on energy policy.


RSS icon Comments



Posted by infrequent | April 30, 2008 10:11 AM

Speaking personally, I was an Edwards supporter when those things happened, and they were a big reason why.

Friedman today is a must-read, btw.

Posted by Levislade | April 30, 2008 10:11 AM

so you know how to use the jumps, you just choose not to when they are long winded feminist rantings where you make minimal contributions.

also your whole argument boils down to "look at what obama did! EEEEH!"

Posted by Bellevue Ave | April 30, 2008 10:12 AM
By judging Clinton on one stupid, pandering policy point—the pointless, idiotic, probably harmful gas-tax holiday—Obama supporters ignore the huge gap between EITHER of the Democratic candidates and McCain on energy policy.

Well, gee, Erica, it's nice to see you coming around to that view after regularly spitting out posts judging Obama on one stupid, pandering policy point or another in isolation. Which is, of course, why we were all guffawing at your sudden silence on a Clinton pander in the first place.

Good Lord. I fear where the Stranger "news" bureau goes from here.

Posted by tsm | April 30, 2008 10:16 AM

The gas holiday is a collosally bad idea and focusing on Clinton's support for it which is clearly pandering using something she couldn't possibly be stupid enough to believe in is reasonable.

1. As already mentioned lower taxes by 18c and the demand goes up slightly and the price goes up more than slightly. Americans use some small percentage more gas and 10+ cents of the tax change goes to producers. It's colossally stupid.

2. It's a worse idea than the stimulus checks! FAR WORSE. If gas prices are hurting and Clinton sees it (unlike Obama) just write another check. At least that would get to the people rather than the oil companies. But the checks are so obviously also bad that she has to use some razzle dazzle like a gas tax holiday to hide the stupidity.

Anyway who's going to focus on the differences between our folks and McCain when the democratic party is self-destructing! How can you look away?

Posted by daniel | April 30, 2008 10:16 AM

Seriously, why can't you just address this issue strictly in terms of Clinton's bad judgment call? Why can't you just say (as you did on your personal blog) "STFU" to Hillary and leave it at that? Why does every mistake she makes provoke an anti-Obama rant from you?

Any why do you assume that because I'm an Obama supporter I've automatically given him a free pass on his clean coal/ethanol support? I can assure you that is not the case, but I'm not sure that my assurances will change your opinion that anyone who supports Obama is a fucking ignorant cultist robot.

Posted by Hernandez | April 30, 2008 10:21 AM
Why does every mistake she makes provoke an anti-Obama rant from you?

Because she's a partisan hack. Duh.

Posted by youknowitstrue | April 30, 2008 10:24 AM

As an Obama supporter, I can admit that Clinton's gas tax holiday plan does sound a heck of a lot more reasonable than McCain's crazy scheme, that Clinton *seems* to have the superior health care plan (though the 'compulsory' stuff worries me - my parents are dealing with the MA compulsory health care plan right now) and that even though Obama didn't outright support his old Senate mentor Lieberman in the CT election, he may as well have for the tepid effort he made on Lamont's behalf.

I'm not really sure what you're trying to articulate here, though, exactly. This was sort of a scattershot, "but what about?" barrage of bullet points that don't really cohere into a single argument.

Posted by Peter F | April 30, 2008 10:26 AM

i'm glad that people aren't taking the bait; this is an attempt to talk about obama's past instead of clinton's present.

i agree with the one decision in isolation vs. evaluating the entire policy, but i think tsm dealt with that @4 above well.

another thing to consider about this isolated incident is the timing. clinton made this choice now for some very important reasons, and she has to know to which group this would most appeal.

Posted by infrequent | April 30, 2008 10:29 AM

The blatant pandering, when Hillary clearly know better, is the problem here. It reeks of desperation and it's pathetic. And, as other commenters pointed out, turning a legitimate criticism of Hillary's pandering into a screed against Obama is beyond pathetic on your part.

Posted by keshmeshi | April 30, 2008 10:31 AM

She's also baiting Obama for his position with "but what about the consuuuumers?" b.s. and trumpeting her position. It's not like he's calling press conferences and denouncing her for being anti-clean coal (if she is).

Posted by Levislade | April 30, 2008 10:33 AM

You know what? I know Obama has scratched some backs and has dirt under his fingernails. You know how I know this? Because he's running for president of the United States of America. You don't even get to be a serious contender without making deals.

But if we're judging candidates based on how dirty they've gotten from scratching backs, I'll pick the one with dirt under his nails over the one who is dirty up to the elbows.

Posted by JC | April 30, 2008 10:36 AM

Until Hillary signed on, the gas tax holiday was nothing more than your typical irresponsible Republican tax cut. Now it's a bipartisan idea, thanks to classic Clinton triangulation.

Posted by elenchos | April 30, 2008 10:37 AM

@11 & @13 yes! now obama has to defend his position against the gas tax holiday (against clinton now, and mccain later). and he also has to deal with the bi-partisan issue now.

Posted by infrequent | April 30, 2008 10:42 AM

how does a hillary clinton supporter reconcile the whole "bipartisanship just means caving towards republican policy ideas" and still think she's a fighter for the democratic party?

Posted by Bellevue Ave | April 30, 2008 10:45 AM

Unless there is some relief, goods and services are not going to make it to market. Already, some dairies and poultry producers are closing down. You can only carry the liberal elitist notion of discouraging consumption with high taxes so far, but consumption must continue (e.g. agriculture). Lowering or temporarily reprieving high gas taxes will only help the constituencies the Democrats claims as their own survive, which in turn helps the economy and all of us.

Posted by raindrop | April 30, 2008 10:53 AM

"Unlike McCain, she would pay for the proposal by taxing windfall oil company profits and closing tax loopholes that benefit oil and gas companies."

Super! And the drop in gas prices will be immediately erased by an increase in demand. But instead of the money going to the Highway Trust Fund, it ends up in the pockets of the oil refiners - nice compensation for them for the "windfall" tax. Econ 101. You might want to check it out.

"And she addresses some of the actual reasons gas prices are at record highs: America’s refusal to dip into oil reserves, and OPEC’s stranglehold on oil production."

Uh, no. Clinton's plan calls for halting additions to the Strategic Petroleum Reserve - which currently amount to 0.1% of global demand. Once you've taken that Econ 101 course, Erica, you can report back on why that won't make any difference. The SPR is the liberal counterpoint to ANWR: won't make a damn bit of difference to the price of gas, and much better off left alone.

And I can't believe you're actually impressed with her pledge to "pressure" OPEC to increase production. I mean, really Erica, if it were as easy as complaining to the WTO, don't you think some other president would've gotten that bright idea already?

And even if emptying the SPR would make a difference and even if we could leverage OPEC to increase production - we wouldn't want to do it, because that would decrease the price of gas. Which, as you point out later on in the post, is a bad thing - because we want to be using less gas.

In sum: Clinton's plan sucks because it won't work, and would suck worse if it did work. And all you had to do with this post was admit it.

Posted by MplsKid | April 30, 2008 11:05 AM

Well. Erica, my days of not taking you seriously have certainly come to a middle.

Posted by ru shur | April 30, 2008 11:08 AM

Will sombody clear this up for me. How will McCain and Hillary be able to do this this summer if they won't be president until 2009? Magically? Oh I see, they are pretending to be president and already telling congress what to do and when to do it. Would hillary do this is she wasn't running for president? NO!

PS: "Where were Obama supporters when he backed Joe Lieberman over Ned Lamont, contributing $4,200 to Lieberman’s campaign?"

I guess I was at home. Maybe at work. I really wasn't paying too much attention at the time. I guess I dropped the ball. Wait, what does this have to do with the gas tax holiday?

Posted by cochise. | April 30, 2008 11:11 AM

raindrop, you simply dont understand why an 18.4 cent reduction isnt going to make a huge difference in the price of goods especially with demand rising to counteract any price decrease there would be in gas taxes.

Posted by Bellevue Ave | April 30, 2008 11:15 AM

@17 - wow, I totally missed that part. Clinton is pandering on the SPR now, too? And ECB actually believes that the tiny, tiny fraction of the oil supply going into it is affecting oil prices?

Ugh. It never ends.

Posted by tsm | April 30, 2008 11:17 AM

i'll say that, as a big obama fan, i'm not a fan of the E85 stuff. it's a sham. i am, however, a fan of nuclear power. as of right now, it's superior to anything else we have. dealing with the waste is obviously an issue, but it's cleaner, and meltdowns are practically impossible now with better technology. obviously, there are better ways, ways that should be explored and invested in, but until those alternate power sources are feasible, but technologically and politically, nuclear seems to be a far superior path to "clean coal" and whatever else.

Posted by konstantconsumer | April 30, 2008 11:17 AM

The Sunoco banner ad at the top of this page makes this post funnier

Posted by Peter F | April 30, 2008 11:31 AM

ECB you don't get it.

We weren’t commenting on HRC’s hypocrisy, we were commenting on yours.

Posted by Mikeblanco | April 30, 2008 11:56 AM

Repeat after me, "There is nothing wrong with nuclear power!".

Basically anyone against nuclear energy at this point has as much scientific validity as someone arguing against global warming or against evolution. Nuclear power could fix almost all of our energy needs RIGHT NOW! And it would reduce our emissions of green house gasses immensely.

Posted by Andrew | April 30, 2008 12:01 PM

Oh, Andrew, only the UK and France buy that argument.

Everyone else knows it's a fake argument. You'd be far better off taking a fraction of the total cost money and putting it into installing C02 scrubbers on every single existing coal power plant in the US (most of our energy supply, FWIW).

Haven't seen many attempts by al-Qaeda to attack coal plants ... or use "spent" coal to attack us ...

Posted by Will in Seattle | April 30, 2008 12:06 PM

Looking back at ECB's post.....

She links to herself like its a reference. But when you say something wrong twice it doesn't make you less wrong.

She describes Rick Boucher as a lobbyist for coal. He is, in fact, a Democrat congressman! ECB is running down Obama for getting an endorsement from a congressman who is a member of the Democratic party! Can she get any more nutty?

I say "yes" but only time will tell.

How eviel of a

Talk about drinking the kool aide.

Posted by Mikeblanco | April 30, 2008 12:12 PM


It doesn't cost significantly more to build a nuclear power plant versus a coal power plant. The biggest difference in cost is due to the insurance involved (why not have the federal government take care of that?). So sure you can install CO2 scrubbers now, but as you take coal plants offline, replace them with a nuclear plant. There is simply no reason not to.

Coal is just as much a finite resource as oil. It's stupid to build plants that require something we know we are going to run out of.

There's no credible way al-qaeda or anyone else could attack a nuclear power plant and cause any real damage. It's a straw man argument. Attacking a chemical plant or oil refinery would cause much more damage and would be much easier to do.

If you are really worried about spent fuel being used against (again another straw man) just recycle the damn stuff.

Posted by Andrew | April 30, 2008 12:18 PM

I'm too drunk to actually parse all that. Is she saying in multiple paragraphs what she could say with a single sentence: "Yep, Hillary is wrong on that one"?

Posted by Mark at YVR | April 30, 2008 1:29 PM

I said total cost. From the mining, shipping, pre-processing, operation, post-processing, post-storage - and all the security costs for every stage.

Do you even know how they mine it? I do.

Posted by Will in Seattle | April 30, 2008 1:29 PM

@20: Yes, saving ~$2.00 a fill up isn't that much for folks who gas up only once or twice a week, but if you operate a fleet of vehicles for your business it would be very worthwhile. Next we need state and local tax releif. Note that oil company & gas station profit combined with the cost of production and transportation is a smaller percentage of the price of a gallon of gasoline than the taxes on top of it.

Posted by raindrop | April 30, 2008 2:15 PM

Gas holiday = 5% savings for a limited time = about $20-$30. Big deal.

Properly inflate your tires: estimated to increase fuel efficiency on average by 3%, all year long = $200 to $300/yr. Plus, it helps people use less gas instead of encouraging them to buy more.

Posted by Mark | April 30, 2008 11:31 PM

What gets me is that Hillary is smart enough to know this is a bad idea. She just doesn't care because it buys her some cheap votes.

Posted by saint paulie girl | May 3, 2008 11:18 AM

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