Anyone (Epecially a Presidential Candidate) who Supports the Gas Tax Holiday is Stupid
It immediately reeked of shortsightedness and pandering to middle class voters: "Lets suspend some of the federal gas tax to give consumers a break this summer!" Afterall, gas sure got 'spensive didn't it!
Just a few minutes worth of thought about this plan will reveal two practical problems, and one fundamental one:
Practical issue 1: The rebate would knock 18 cents off the price of a gallon of gas. However, oil companies would surely swoop in and just raise their prices a bit. Not the full 18 cents, but a bit- to capture some of that slack. So for all intents and purposes, part of it would be a direct subsidy to the oil companies.
Practical issue 2: The government doesn't really have the money to do this! The national debt is the highest it's ever been; what room do we have to spend any more money on a program like this? The money would be added directly to the national debt, which would just have to be paid back later anyway. If it was phrased as a "loan to consumers to buy gas this summer, which they'd later have to pay back with interest", do you think it'd be as popular?
Furthermore, the money collected from the gas tax goes directly to maintaining highways and bridges. Am I the only one who's read countless articles about how tons of bridges are unsafe from needing urgent maintenence?
And finally:
Fundamental problem: It's completely economically backwards! This would merely encourage us to keep using more oil, and higher demand with the same supply leads to one thing: higher prices!
So, if you know someone (especially a presidential candidate) who supports this sort of thing, you at least know that their grasp of economics is tenuous at best, and damaging at worst.
Just a few minutes worth of thought about this plan will reveal two practical problems, and one fundamental one:
Practical issue 1: The rebate would knock 18 cents off the price of a gallon of gas. However, oil companies would surely swoop in and just raise their prices a bit. Not the full 18 cents, but a bit- to capture some of that slack. So for all intents and purposes, part of it would be a direct subsidy to the oil companies.
Practical issue 2: The government doesn't really have the money to do this! The national debt is the highest it's ever been; what room do we have to spend any more money on a program like this? The money would be added directly to the national debt, which would just have to be paid back later anyway. If it was phrased as a "loan to consumers to buy gas this summer, which they'd later have to pay back with interest", do you think it'd be as popular?
Furthermore, the money collected from the gas tax goes directly to maintaining highways and bridges. Am I the only one who's read countless articles about how tons of bridges are unsafe from needing urgent maintenence?
And finally:
Fundamental problem: It's completely economically backwards! This would merely encourage us to keep using more oil, and higher demand with the same supply leads to one thing: higher prices!
So, if you know someone (especially a presidential candidate) who supports this sort of thing, you at least know that their grasp of economics is tenuous at best, and damaging at worst.
posted by Matt at 9:01 AM
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