Proposed Gas Tax Holiday Panned As Gimmick; Also, Water Is Wet

Floating around the policy wonk-o-sphere and on the front page of most of the news dailies today is this idea of a temporary holiday on Federal gas taxes for the summer driving season. Presidential candidates Sen. John McCain (R-AZ) and Sen. Hillary Clinton (D-copycat) have hopped on the "good idea" bandwagon, while Sen. Barack Obama (D-IL) rides on the "not-so-good idea" wagon-for-one. Analysts at the Urban-Brookings Tax Policy Center, along with Greg Mankiw, former chairman of George W. Bush's Council of Economic Advisers are both saying "Not so fast!" Heck, even Bush's spokeswoman Dana Perino is saying it's a bad idea. Seems these economics experts think that something crazy called "Supply and demand" will cause consumption to rise as prices fall, and since capacity is at a peak, prices will just go back to where they were before the tax holiday.

Of course then the tax holiday would end and the 18.4 cents on the gallon tax would be added right on top. Clinton even went on to advocate for paying off the hole in the budget which would be left by levying a windfall tax on the huge profits of the oil companies. Now, we're not really whooping and hollering at the idea of high gas prices, but discouraging the profit motive of corporate energy producers in favor of short term political gains seems like a recipe for disaster. Who knew you could mix two different disaster recipes from the same list of ingredients? Oh, and let's not forget the additional consumption would mean additional profits for big oil, something that would just rub salt in the wounds of the fuel-buying public — especially given the record profits released today by the two biggest oil-producing companies. [Reuters via Yahoo News]
photo from redstatearizona