Gas Tax Redux

Last week I posed a simple challenge: Try to find any coherent economist willing to support the gas tax holiday proposed by candidates McCain and Clinton.

The challenge remains unanswered, but here’s some interesting commentary collected during the week:

1. George Stephanopoulos posed my challenge directly to Senator Clinton (video here), asking: “Can you name one economist — a credible economist — who supports the suspension?”

After Clinton side-stepped the question, he pushed on: “But can you name an economist who thinks this makes sense.” Clinton’s response: “Well I’ll tell you what, I’m not going to put my lot in with economists.” (HT: Mark Thoma)

2. Sam Stein took my challenge fairly directly, playing the economics version of “Where’s gas-tax-supporting Waldo now?”

He tried Clinton’s spokesperson, libertarians, conservatives, progressives, ex-Clinton staffers, even the transportation workers union or the American Trucking Association, but still couldn’t find any support for the gas tax holiday.

3. Greg Mankiw received a note from Len Burman:

Yesterday I was on the NewsHour to talk about the gas tax holiday. I asked if there was another guest and the producer said, “We tried, but couldn’t find anyone to argue the other side (that the gas tax holiday made sense).”

4. By contrast, Henry Aaron from Brookings, managed to very quickly whip up a list of 150 economists opposed to the gas tax holiday. And there are some pretty impressive folks on the list, from across the political spectrum.

This makes me proud to be an economist. In any election silly season, you can usually find someone willing to support just about any kind of nonsense. And reality T.V. teaches us that people are often willing to do or say nearly anything to get their faces on T.V.

But it appears that the economics profession just isn’t that silly.

My $0.02: This issue isn’t that important in the grand scheme of things. But hopefully sufficient negative reaction to silly ideas this early in the election season will deter future silly ideas when the election heats up.

Finally, for those interested in economic research on the effects of a gas tax moratorium on gas prices, let me suggest a recent paper by Joe Doyle and Krislert Samphantharak (available here). There are reasons to think that the previous state-level gas tax reductions they study may not provide perfect guidance to the current proposal, but it is a start.

[Freakonomics trivia: Steve Levitt was Joe's dissertation advisor.]

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  1. Ray G says:

    I’ll second the blog entry of Bryan Caplan (a highly credible ecnomist).

    http://econlog.econlib.org/archives/2008/05/ill_shill_for_h.html

    But, as he says, it’s not what the Hill camp want or how the American people want to hear it.

    He does make one very astute observation though; if such “crises” were just as likely to spur tax cuts as they were the economically destructive populist measures that politicians are more prone to, then yes, a tax cut would help in that we might avert other measures.

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  2. sirhcton says:

    Curiously, you cannot seem to find anyone directly questioning Mr. McCain and staff. Since he also (and originally?) proposed the tax holiday, should he not also recieve an equal opportunity?

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  3. mike says:

    okay now let’s take a deep breath. Is it possible that Clinton’s idea makes bad economic sense and also makes good sense? Is this a possibility?

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  4. Bill says:

    I am a Democrat, and I understand government has a role in our lives, but Sen. Clinton is trying to give us a free lunch. This is the same candidate who wrapped all of her proposals up in Christmas wrapping for an ad in Iowa — universal pre-k or health care or whatever were gifts for the politicians to give to the voters. Everything has a cost, even if you say you are shifting the cost to the oil companies or the hedge fund managers.

    As I understand them, the cap and trade proposals now pending on the Hill would impose the carbon tax at the beginning of the chain — the wellhead or the mine gate. Shouldn’t the ultimate users of carbon — drivers or electric consumers — see the impact of their use?

    Oil and natural gas were remarkably inexpensive for nearly 20 years and we are now paying the economic and environmental costs.

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  5. Mike54 says:

    I suggest that gasoline consumption will not increase measureably if the tax is removed.

    If the price is unaffected by removing the tax, why not triple the tax? The gov gets more revenue and the folks pay the same price per gallon.

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  6. eddy says:

    I am in favor of cutting taxes under any circumstances and for any excuse, for any reason, whenever it’s possible. The reason I am is because I believe the big problem is not taxes, the big problem is spending. The question is, “How do you hold down government spending?” Government spending now amounts to close to 40% of national income not counting indirect spending through regulation and the like. If you include that, you get up to roughly half. The real danger we face is that number will creep up and up and up. The only effective way I think to hold it down, is to hold down the amount of income the government has. The way to do that is to cut taxes.

    -Milton Friedman (economist)

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  7. CDW says:

    This seems to be pretty typical for Hillary. She must have things her way and will not listen to anyone who doesn’t support her view. We have her 1990s healthcare initiative as an example.

    And as someone above said, she’s Decider II. Maybe the my way or the highway attitude has something to do with being second in the dynastic succession.

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  8. jonathan says:

    This kind of issue is interesting because it highlights the difference between the objective and subjective. We know objectively that removing the gas tax in whole or in part for a short time isn’t important. But just as people remembered FDR’s Fireside Chats or JFK’s “Ich bin ein Berliner” – the “I am a doughnut” speech – gestures are important. This gesture could subjectively say, “The government understands that you’re suffering.” One can call that pandering but another might then say that gestures are part of what a government is for.

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