Gas Tax Holiday: the $30 bribe
Okay, so you've been hearing the plans from Senators Clinton and McCain about how they want to suspend federal gas taxes during the summer, because that's when gas prices tend to go up. This is supposed to help Americans who are hard-hit by rising gas prices, which are approaching $4.00 a gallon right now. This is supposed to ease our lives. Barack Obama has called this a gimmick, and rightly so. There are many reasons as to why this "Gas Tax Holiday" should immediately appear to be only so much gas, and you don't even need a degree in macroeconomics to understand them (but I'm sure it wouldn't hurt.) —It's a small slice of pie. The federal portion of the gas tax in the United States is 18¢ per gallon. Assuming you drive the same distance that the average American drives in a summer, this should net you about $30.00 by August. Wow! That's almost one whole free tank of gas! Why doesn't the government just write all of us $30.00 checks every three months and get the economy humming again? —Upkeep. The gas tax nets the government about $10 billion a year, and this money is earmarked for road and bridge maintenance. If the roads are in lousier shape, this will be harder on our cars. Collapsing bridges will be harder still. —Supply and demand. A lower price increases demand, which means that if gas is cheaper, people will use more of it, thus shrinking supplies and driving the price up. 18¢ isn't enough to make that much of a difference, admittedly, but it pulls the essential Jenga block out from the bottom of this already flimsy argument. —What the market will bear. Petroleum companies, understanding what markets do, will just raise the price by 18¢, eliminating any benefit that this "Gas Tax Holiday" might bring about. That will just mean bigger profits for petroleum companies. And Hillary Clinton's "windfall profits" tax on petroleum companies, while a good idea by itself, wouldn't make up the difference here. Remember that something like much more than half of all petroleum is pumped out of the ground by government-owned petroleum companies—foreign governments. This would punish American companies while rewarding foreign governments—all while starving America's infrastructure! Brilliant! It's all too rare to hear a politician speak plainly and rationally in the face of feel-good proposals that only serve the would-be elected official who proposes them. It does my heart good to see Barack Obama shouting this one down. The government can keep my thirty bucks this summer and go fix a bridge.