April 29, 2008

Karen Tumulty on the Proposed Gas Tax Holiday

Tumulty (who I think's been doing rather nice posts over on Swampland) offers her take on the proposed gas tax holiday (favored by Senators Clinton and McCain, opposed by President Bush and Senator Obama - and of course opposed by Senator Clinton when one was proposed during the Clinton administration in 2000). She thinks McCain and Clinton are likely to win the issue politically, but that Obama and Bush are probably right as a matter of policy. That seems the likely outcome of this dispute to me. Though I've got to wonder if many voters aren't smart enough to realize that just because the 18 cent federal tax goes away for a few months, that doesn't mean that the oil companies will actually cut their prices for consumers by 18 cents - especially in the summer. So since it's a fairly obvious short-term give-away that will cut federal revenues in times of big deficits, and largely benefit the oil companies ... well I think a pretty strong ad can be made against it that would appeal to a fair number of voters. And if gas is already $3.70 a galloon - will consumers really notice 5 cents less (or around that) a gallon? That said, ads against tax cuts are always a hard sell (though ads against big oil should play really well in the current environment - really well).

Posted by armand at April 29, 2008 10:15 AM | TrackBack | Posted to Economics | Politics


Comments

Thank you for saying what I have been saying about this all along. I seriously doubt prices based on high demand will go down because of this stupid proposal.

Posted by: ryan at April 29, 2008 11:28 AM | PERMALINK

Maybe I'm confused. Depending on what state a person lives in, the "big oil" companies get either a little more or a little less money off a gallon of gas than the government gets, by the time you include state taxes, federal taxes, and capital gains taxes on people selling their oil investments. But they, you know, bring it to market, actually do something. What does government do to get as much money from us per gallon as the oil companies?

Posted by: Morris at April 29, 2008 11:58 AM | PERMALINK

Errrr, build and maintain highways so we can use our cars?

Posted by: Armand at April 29, 2008 01:06 PM | PERMALINK

what does the government do? build and maintain your highways and bridges, you twit.

try to go hunting 300 miles from home using only state and local roads some time. my advice is, bring a tent: you'll be overnighting.

moreover, no one in the government in charge of highways and bridges (and police, and disaster management, and whathaveyou) makes an avaricious wage. sure, the construction firms retained surely pay their executives lots, maybe even over a million once in a while, but the oil companies pay everyone at the top more than that, lots more in fact. and let's not forget that the paving companies are just as bent over by the oil companies as the rest of us are, and they, in turn, have to hit us up to compensate.

to compare arguably avaricious profits to what amounts to usage taxes -- if you're buying gas, you're using state and federal roads -- is to compare apples to, like, footstools.

i love the fact that about 80 percent of this country seems to thinks that they are entitled to roads that they don't pay for, entitled to drive dozens of miles every day alone in a car to avoid paying modest urban income taxes and then to bitch about any revenue-raising efforts on the part of those charged with maintaining the roads said commuters are responsible for weearing out . . . just completely oblivious of what it costs to maintain a highway system.

completely.

oblivious.

but morris, surely you know better. so why don't you try to come up with something responsive this time.

Posted by: moon at April 29, 2008 01:11 PM | PERMALINK

Moon writes: "what does the government do? build and maintain your highways and bridges, you twit."

Oh, really?

Via Brookings:
"As dreadful as the Minneapolis disaster is, there is no guarantee that raising the federal gas tax and pouring more money into the system will have any affect on our nation's roads, bridges, or transit networks.

"The federal government lacks a theory of its role and is absent or agnostic when it comes to where highway funds are spent. The gas tax feeds the highway trust fund which is distributed to states without any kind of purpose, oversight or accountability. Nor are the funds tied to any goals such as keeping bridges in good repair, reducing congestion, improving air quality, or connecting workers to jobs and education. It is as close to sending states a blank check as you can get.

"The other problem with increasing federal revenues is that the states simply use the new federal money for funds they otherwise would have had to raise themselves. The U.S. Government Accountability Office found that this "substitution effect" means there may not actually be more money spent on transportation and the federal government, as a result, winds up funding a tax relief program for the states."

Posted by: Morris at April 30, 2008 02:24 PM | PERMALINK

Errr, so? Apparently Brookings would like more federal direction and oversight in the exact way that federal highway funds are spent. And that's fine. But in order to have such planned spending, you've still got to have spending in the first place. The roads don't miraculously appear out of thin air. Taxes pay for them.

And I really don't see how state taxes versus federal taxes is particularly relevant to this discussion.

Posted by: Armand at April 30, 2008 03:05 PM | PERMALINK

So as long as we pay taxes, the government does its job? I'm sorry, I thought you were a Democrat, someone who won the Congress in 06 based on their lamentations about the use of earmarks, about lobbyists who keep taxpayers money from being used properly. I didn't realize that, to you, as long as we fill the government coffers, it won't matter what they do with it. It won't matter that Minneapolis will take millions of dollars and use it for light rail projects leaving their overhead passes so debilitated that they just fall down in the middle of rush hour. I was confused. My mistake.

And, yes, if the feds give money to states for whatever project they want, how is that not as bad as/worse than the oft lamented HALIBURTON? It easily can turn into graft, because they can pass the money on to fund whatever scheme their buddy runs with no accountability. But, could it be, that once the Democrats have power, their concern with corrupt slush funds suddenly evaporates?

Posted by: Morris at May 1, 2008 08:27 AM | PERMALINK

Morris please, for the love of the mouse and disco ball, stop making crap up. I did not say that as long as we pay taxes the government does it's job. I said nothing of the sort. I did say that if we don't pay taxes the government can't do it's job. That's not remotely the same thing - or anything that should be the slightest bit controversial or surprising to anyone familiar with concepts like money and contracts.

And your second paragraph is also just wild nonsense. The feds don't just turn over all their cash to the states. That's readily apparent, despite whatever words you want to borrow from Brookings' reports. And throw even the tiniest little bit of logic into the mix and your wackiness becomes even wackier. Why would there mythical conspiratorial Democrats tax the country just to provide slush funds for Gov. Ahnold, Charlie Crist, Rick Perry and the like?

I'd really think you'd want to just let this thread drop - b/c your arguments in it are just incredibly weak.

Posted by: Armand at May 1, 2008 10:03 AM | PERMALINK

so in sum, because the federal government provides inadequate oversight of the verily BILLIONS of dollars it gives to infrastructure every year (and i've actually worked on this shit, morris, so please don't tell me i'm wrong about the basics), we should test out what happens when those funds dry up. hey, you're in the company of millions of americans in so demanding, but you'll be feeling just as shitty as they do when we're all driving 20 miles an hour on rutted dirt roads because as bad as the feds are about funding these things efficiently, the states won't be able to fund it at all, because their electorate won't let them. it'll be like california, with all the referenda binding and gagging officials with respect to the budget. that's progress, really.

amusingly, everyone in the rural northern part of the state goes apeshit when pennsylvania proposes tolling I-80, but they also rally for property tax relief, and militantly against all taxes whatsoever (notwithstanding that they on the state level, just like the louisiana's of the federal system, take a lot more out of the treasury than their taxes put in -- you'd think they'd stop looking the gift horse in the mouth and realize, if they think they've got it bad now, what with elitist candidates calling them bitter and all (which, by the way, all you have to do is read one of those communities editorial pages to recognize the truth in it), they'll have it much worse if they get the tax parity they claim to want, when they're back living in the stone age and educating their children on abaci).

interstate commerce would grind to a halt without federal money, morris. nothing in the brookings report you quoted suggests otherwise. and either you know this or this thread really is silly.

aside from which, how many economists need to tell you that an $0.18 break on gas will only stimulate demand, and the price will end up right back where it was, except that now, instead of $0.18 going to the feds for mismanaged-but-nonetheless more-effective-than-nothing highway funding, about $0.06 will go in the already swollen to bursting pockets of big oil. not to mention, the one salutary effect of all of this -- people starting to acquaint themselves with bicycles and mass transit and not running out to the strip mall in the SUV every time some little item is missing from the kitchen -- will be diminished if the price of gas drops at the expense of federal revenues.

i've got an idea. want to stimulate the economy? how about accelerating the schedule on the minimum wage increases. back when inflation was paltry the MW wasn't keeping pace. right now, it's just crashing relative to the cost of living at the expense of the working poor -- you know, the salt of the earth folks on whose behalf the right claims to speak (er, if not legislate).

Posted by: moon at May 1, 2008 12:48 PM | PERMALINK

Bro,
Democrats believe in the government having more money and the people having less. That's why people like Hillary want to take away our money for our own good. That's why Barack wants to take rich people's money even if it harms us in the long run. The more money that flows through government coffers, the less people have in their pockets and the more they rely on government to solve their problems.

Are there projects that get built, are highways improved? Sure. But I get a little upset that I'm paying for freaking Minnesota to get its own light rail system. I even get upset at Jindal for saying Louisiana wetlands are the nation's responsibility. I just don't see it. If Louisiana wants to protect wetlands, let us pay for it, and if Minnesota wants to get light rail, let them pay for it. The interstates are one thing, but local interests are another. And the current highway system is like paying $1.50 for a bottle of water. Do I need water? Sure. But that doesn't imply that I should have to pay several times what it's worth, or that I should think I'm getting a good thing if I can.

Moon writes: "i've got an idea. want to stimulate the economy? how about accelerating the schedule on the minimum wage increases."

Ever heard of a wage/price spiral? Has it occured to you that along with increased oil prices (Thankyou, Dems, for opposing drilling in Alaska) and increased crop prices related to biofuels (Thankyou, Dems), the other recent inflationary push comes from the minimum wage increase last summer, this summer, and next summer (Thankyou, Dems)? I love libs and their good intentions. What did you think would happen to the economy when you increased the minimum wage by about 35% in a span of two years?

Posted by: Morris at May 2, 2008 12:45 PM | PERMALINK

explain to me on what planet you think it was better with a minimum wage that was sliding for 10 years relative to inflation. and then explain to me what job you're willing to do in which your real wages go down 3-5% year after year. and then explain to me why you think that's a good thing for your children, something you'd be comfortable with them facing in the workplace.

were we not a healthy country, economically, when the minimum wage amounted to a fairer wage? were small businesses packing it in because they just couldn't bear to pay their help enough to feed their children decent food? oh wait, no, that didn't happen until the right got together with the walmarts of the world to ensure that labor, fair wages, and small business would wither and die.

seriously, maybe you worked for the minimum wage at some point in your life (i know your rhetorical tactics, and that's all you'll talk about in response if it's the case), but you have never done so suspecting that's as good as it's ever going to get for you, or with kids at home.

speak to the real issue: what's going to stop the oil companies from blaming a slight uptick in demand for raising the prices right back to where they were? after all, exxon had a horrible quarter, only increasing its year-to-year profits by like 30%, which of course has led the share price to plummet, and the directors and officers to worry about their job security. and that makes loads of sense as a matter of fiscal conservatism, doesn't it?

and find me one mainstream economist willing to speak out in favor of this tax holiday. everyone with any sense on both sides who isn't elected thinks it's precisely the pandering "gimmick" obama says it is.

as for biofuels, please don't lay that on the left. it's the right's "idea" from the get-go (switchgrass, anyone), because it enriches a small, influential part of their base, and assuages the sensibilities of moderates too indifferent to figure out that the whole thing is, at best, an environmentally neutral con. spend a tenth of an iraq war on real energy technology, and we could wean more or less completely from middle eastern oil without touching ANWR. but no, instead, we find a way to outdo the already incredibly deleterious farm subsidies by skewing the market even worse by incentivizing environmentally unhelpful ethanol to no discernible benefit outside of agribusiness (and even for them, the benefits are incredibly shortsighted).

so why don't you tell me about that free market again, as we encounter yet another instance of rampantly interventionist and short sighted anti-free-market policies on the right? but god forbid we impose regulations that actually force bankers to tell their investors what kind of ponzi scheme they're investing in. that would be downright . . . socialist.

Posted by: moon at May 3, 2008 01:10 PM | PERMALINK

"Democrats believe in the government having more money and the people having less." - Errr, what? Turn off Rush and find a Democrat who actually says such a thing. Guess what. You won't. Republicans love saying that kind of crap about the Democrats, but just b/c they say it doesn't make it true. George Bush and the Republican Congress gave us big government spending at levels not seen in decades. And they seem quite less interested than the Democrats are in raising the living standards of the poor and middle class.

And you think not opening ANWR is the reason gas prices are high? Ummm, wow. Just wow. That's nutty as can be.

And as to this - "But I get a little upset that I'm paying for freaking Minnesota to get its own light rail system. I even get upset at Jindal for saying Louisiana wetlands are the nation's responsibility. I just don't see it. If Louisiana wants to protect wetlands, let us pay for it, and if Minnesota wants to get light rail, let them pay for it. The interstates are one thing, but local interests are another." So ... you are against providing for the infrastructure that supports the nation's commercial growth, and you are against environmental protections that keep current economies intact. Beliefs like that would seem to imply it's time for you to join the Libertarians as neither the Republicans nor the Democrats favor such positions - and that's in part due to the fact that they don't want "the people having less".

Posted by: Armand at May 3, 2008 02:19 PM | PERMALINK
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