You may have heard, but the latest campaign issue is support of a summer “Gas Tax Holiday”. The idea is that the government would stop collecting it’s 18 cent a gallon gas tax for three months over the summer to help the common man pay for his fuel.
This was an idea that seems to have surfaced from the McCain camp, but has been wholeheartedly embraced by former First Lady, Hillary Clinton. She is supporting this ‘tax holiday’ on the premise that it will help the common man, the idea that taxing the oil companies is more intelligent and blasting Barack Obama for not supporting it. Barack is a little more reasonable and sees this for the bait and switch that it is:
“There is not a single economist or editorial that I’ve read that says that this is a good idea, and the reason is, is because it’s not being honest with the American people,” Obama said on NBC’s “Today” show. “People don’t need symbolic relief, they need real relief.”
It’s understandable that Obama’s opinion doesn’t carry much weight with ol’ Hil, but neither does any of the economists who say removing the tax will just cause the gas prices to rise and make the oil companies more money.
Why doesn’t cutting the gas tax this summer make sense? It’s Econ 101 tax incidence theory: if the supply of a good is more or less unresponsive to the price, the price to consumers will always rise until the quantity demanded falls to match the quantity supplied. Cut taxes, and all that happens is that the pretax price rises by the same amount. The McCain gas tax plan is a giveaway to oil companies, disguised as a gift to consumers.
Hillary, of course, has a witty response to this
Sen. Clinton has been undeterred by the outcry. “Well I’ll tell you what, I’m not going to put my lot in with economists,†she said over the weekend. “We’ve got to get out of this mindset, where somehow, elite opinion is always on the side of doing things that really disadvantage the vast majority of Americans.â€
Being the “man of the people” she is, she just isn’t going to trust all of those crazy scientists with their numbers, figures, calculators and such.
Hmm… so let’s take a look at this as your average guy who is NOT an economist.
In the last year US Gas prices have risen $0.559 to a nationwide average of $3.613 per gallon. The federal gas tax rate is 18.4 cents per gallon. This means that, on average, right now, even if we get a ‘tax holiday, and even if the price of gas doesn’t increase to absorb this tax, you and I are paying $0.374 more per gallon of gas than we did last May. In the mean time, the economy has been slow and we are not making any more money than we did last summer. If we DON”T go on vacation, and buy, say 15 gallons of gas a week, and we have a tax holiday, our summer is going to cost us $67 more than it did last year. If we don’t get the tax holiday, the difference will only be $33.12.
Remember, the average price of gas is $3.613 per gallon, reducing the price by $0.184 is only a 5.1% discount in price. Heck, I can get almost that much by using my Safeway card.
All of the math, figuring, analysis and speculation aside, what I really love about this is Hillary’s disdain for the educated people. The democrats have spent the last eight years for Bush’s alleged low intelligence, and generally ridiculing conservatives in general for skepticism about Global Warming, belief in Intelligent Design. Now one of their two chosen candidates, arguably an elitist intellectual herself, is telling us we shouldn’t listen to these elitist intellectuals. She’s saying that she, as a lawyer and politician, knows more about what’s going to happen than trained economists.
The whole thing reminds me of a joke from the old Soviet Russia days:
Why do policemen always walk the streets in teams of three?
The partners in the police team are always chosen in such a way that one of them knows how to read, the other how to write, and the third one, naturally, has to keep watch over those two intellectuals.
Thankfully, Hillary Clinton is here to keep us safe from those educated people.
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