Monday, May 05, 2008

Gas tax holiday is a horrible, no good idea

Please America. Do not be fooled by the bread and circuses.

When I first read "gas tax holiday" I thought it meant that we were going to be celebrating the gas tax; an idea that I found rather odd. But now, as I understand it, both Clinton and McCain are suggesting that the gas tax be cut for the summer. While the extra $28 dollars that is likely to result sure sounds nice, this is a really really bad idea.

First, Econ 101. A reduction in taxes will result in lower prices for consumers AND increase the amount of money oil producers will receive. Remember those big bad oil companies that Clinton says she hates? Well, they'll actually benefit from this because they will receive more money for more sales of gasoline.

A related issue is that this will result in more gasoline being consumed, which will result in more pollutants in our air. Hardly what we want these summer months.

Second, the gas tax goes goes into a Highway Trust Fund that (is already in the red) is used for infrastructure construction and repair. This will mean that there will be $9 billion less available for highway repair and maintenance (or actually, $9billion less to pay back the bonds that have already been issued to fund the infrastructure costs). Watch out for those potholes while you're using your barely cheaper gas. Doesn't anyone remember the bridge collapse in Minnesota?

Third, this is exactly the kind of short term thinking that has gotten us into trouble in the first place, and is nothing but political pandering to those most desperate. You want to help low income people with long commutes? Invest in better roads, more public transportation, or at the very least, give these people direct rebates so that the oil companies don't make even more money.

No economist is in favor of this proposal because it sucks is bad policy. When Clinton could not name an economist in favor of this policy, she said that the economists were the "elite opinion."

Does anyone else get the feeling that "elite" has started to mean "smart and well-thought out"?

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