John McCain and Hillary Clinton are both pushing for "gas tax holiday" this summer, a three month moratorium on the collection of the federal gasoline tax. They claim that this would give relief to Americans who are suffering from the skyrocketing cost of driving. This is a bad idea on so many levels I'm not sure I can even count them, but I'll try. The Washington Post's Fact Checker column today names a few of the problems with this plan.
First, the plan only gives an illusion of relief. When Illinois tried such a stunt in 2000 only about sixty percent of the cut made it to the consumers. That is, when the state cut taxes by five cents per gallon and the gas stations cut prices by an average of just three cents. The other two cents were pocketed by the the gas stations and wholesellers. The current federal gas tax is a little over eighteen cents per gallon. Consumers can expect to see a ten or twelve cent cut in what they pay at the pump. If you use 200 gallons over the summer that means your savings will be twenty to twenty-five dollars over a three month period of time.
Second, even in the best of years, gas prices go up in the summer in response to increased demand and spot shortages. The simple fact that we expect them to go up means the oil companies can raise prices without a serious outcry even when demand does not increase. For consumers, this means the relief of a "gas tax holiday" would only last for a few weeks before rising prices put us right back where we started.
Third, gas taxes pay for work on our highways and bridges which are in dangerous ill repair. Cutting off funds for that work would not only result in laying off thousands of civil servants, but it would mean cutting off contracts for the already hurting construction sector and missing a whole season of work on decaying bridges and such. The alternative is that the federal government raise taxes somewhere else to make up the shortfall or add it to the national debt so we can pay for the work and then pay for it again in interest. For the taxpayers, this is worse than a shell game. At the end of the summer, right before the election, we would be faced with a sudden spike in gas prices. What politician facing reelection could resist the call to extend the tax moratorium? Neither Clinton nor McCain would want to be blamed for the sudden rise in prices, so they would be first in line calling for the moratorium--and budget shortfall--to be made permanent.
To the Post's list I would like to add that the moratorium stunt does nothing to address the underlying causes of our pain. We need cars that get better mileage. We need to get more of our energy from non-fossil sources. We need urban mass transit that commuters will really use. We need to get more of the things we use from sources closer to our homes and eliminate transportation costs. What we do not need is another summer of putting off important decisions and pretending we can go on like we always have.
As a state senator, Obama voted for the Illinois moratorium. Within a few months, he knew that it was a mistake and called for its repeal. Clinton and McCain have the example of Illinois to show them that the idea is worthless, but they choose feel-good pandering instead of hard choices and real leadership. If they want to do something about prices that will have some real use, stop worrying about making it a little easier to visit Grandma this summer and start working on a plan to do something about heating fuel costs next winter so Grandma will live to see the following summer. We need more solutions, not more pandering.