[The] gas tax holiday is not, in my view, a good idea. But the furor over what is, when all is said and done, a small and temporary policy proposal is entirely disproportionate. What’s going on?
[E]conomists talk much more about trade than they do about health care policy, because they think they know something about it in a way the laity don’t.
The gas tax holiday is in this category. Economists really do know something about tax incidence that the laity don’t. So when a presidential candidate says something that conflicts with economistic wisdom, it becomes THE MOST IMPORTANT ISSUE EVER. Except, you know, it isn’t.
Krugman framed (and I selectively quoted around) this in terms of a partisan argument. Opposition to the gas tax isn’t based on whether one wants Obama, Hillary, or McCain to win, but rather on the merits of the proposal.
Krugman’s view of the gas tax holiday being a “small and temporary policy proposal” runs counter to our experience with energy policy. Krugman should see that this is blatant pandering to an admittedly struggling middle class (of which I am one), a cheap ploy and politicization of both fiscal and energy policy with uncertain long-term consequences (prices, highway funds, etc.) for short term electoral gains.
The likely outcome will be increasing demand, shrinking supply, and rising prices, with a cumulative negative effect right
being felt right around the election (assuming a couple month lag between the reinstatement of taxes and the economic effects being felt).
Never mind the fact that neither of the proponents have been elected President yet, and Congress isn’t in session – so I’m not quite sure how they would enact this. Similarly, talk of a windfall profit tax on the oil companies has about ZERO chance of passing through Congress, and less of that making it past the President’s desk. Its easy to float things like that when there’s no chance of it happening.
Lastly, Suzie – I read you everyday, I know you are a Hillary supporter, and I know that informs your support of the gas tax holiday. Yes, $30 is a not-inconsequential amount of money to those at financial risk, but how likely is it that prices could rise in-excess of that? How likely would they rise beyond that point once the taxes are reinstated? I know ranting about who is bitter and who is elitist may bring some comfort to the class warriors, but dumbing down policy discussions and the anti-intellectualism of the right and ‘average Americans’ is partly responsible for the Bush years – as Einstein said, “We can’t solve problems by using the same kind of thinking we used when we