Tuesday, May 06, 2008

"Gas Tax Holiday" Pandering Is A "Big Deal"

Paul Krugman is right about this much: As compared to other economic issues, the "gas tax holiday" is small potatoes. But to the extent he is trying to minimize the significance of this particular pander, or to suggest that it's politically worse than Obama's use of certain right-wing talking points in criticizing health insurance mandates, I disagree.

If the test is, "Will a candidate embrace right wing talking points", how would this example give me faith in Hillary Clinton? The entiire idea of a gas tax holiday originated with the McCain campaign. When Obama took the grown-up path, rather than joining the irresponsible pandering of the other presidential candidates, what did Hillary Clinton do? She attacked him, directly and through her campaign, as elitist and out-of-touch with the needs of working people. When confronted with the economic realities of her proposal, what did she do? She made a statement dismissive of economists.

I don't like the Obama team's approach to mandates, both because I think mandates are better policy and because their arguments seem weak. (If arguably better than a blanket statement dismissive of economists, not much better.) There's an equivalence here - in both cases we're dealing with election year politics versus good public policy, with the defenders of the weaker policy engaging in attacks on their opponent that, to me, seem unfair, dishonest and opportunistic.

We could debate whether it says more about a candidate that they engage in this conduct over a major economic issue or a minor economic issue. We could debate what it means that one issue deals with a future, theoretical policy that has not been fully fleshed out, and the other proposes immediate action. I suppose somebody could try to introduce some nuance to suggest that somehow one candidate or the other's proposal is "better founded in economics" than the other. But that's a marginal defense, as what is really important is what these conflicts tell us about a candidate and their approach to responsible public policy. A candidate's dogmatically sticking to a weak or bad economic theory, making little to no effort to explain why theirs is the better theory, then resorting to attack mode and right-wing talking points when confronted on the weaknesses, does not impress me.


  1. If the gas tax gets "waived", I'm sure somehow the price of oil will go up to compensate for the tax.
    What I want to know is what happens when people can no longer afford to drive to work and/or their cars break down and they can't afford to fix them. I teach school in Detroit and the gas station near my school is $3.75 per gallon. I can afford this, but most of my students' parents cannot. This whole thing scares the crap out of me and I would like to see more ideas other than "Let's waive teh gas taxez!!1!1!"

  2. Economists seem to be largely of the opinion that oil companies and gas stations will raise prices to be consistent with demand (as already occurs), or more cynically that they will raise prices opportunistically, such that there will be little to no reduction in gas prices despite a "gas tax holiday".

    This is a one-hour lecture on the struggles of the middle class. (I hope that doesn't scare you off.) I linked to it in a recent post, but it's worth linking again.

    Let's just say, the price of gas is an issue - but it's an issue because of the economic realities facing the middle class. It's not just in Detroit that people are going to have trouble getting to work or school because of higher gas prices - it's an unavoidable expense that many families ("stable, two-income families") aren't well positioned to absorb.

    Peak summer gas prices is only part of the problem - winter heating bills are also going to keep going up.


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