Now that the would-be Panderer-in-Chief, Hillary Clinton, has joined with Republican candidate John McCain in calling for a "gas tax holiday" this summer, the Wa-Po’s "Fact Checker" asks: Will it work?
Short answer: no.
Why? Two words: supply and demand.
Some economists say that a nationwide "gas tax holiday" would have
even less impact on gas prices than temporary state moratoriums, such
as the one passed by Illinois in 2000. "It’s basic economics," said
Leonard Burman, director of the Tax Policy Center,
a non-partisan thinktank. "Gas is always in very short supply during
the summer, which is why prices go up. In order to reduce the price,
you would have to increase supply, but that is difficult over the short
term, because the refineries cannot add capacity."
James Hamilton, professor of Economics at the University of
California-San Diego, said that most of the benefits from a temporary
tax moratorium would likely go to producers rather than consumers. He
said that states that suspend gas taxes are able to respond to rising
demand more efficiently than the country as a whole, because gasoline
supplies can be easily moved from one state to another.
"Prices would certainly rise to the market-clearing level," said
Hamilton. "I would expect the price [of gas] to go back to very close
to where it was before [the tax cut], in which case consumers would not
see any benefit."
Turns out Obama did vote for such a gas tax holiday back in 2001, when he was a member of the Illinois legislature, but both he and the consumers in Illinois were disillusioned by the result, which proved all but meaningless — a three percent savings for some consumers.
A poll by the Chicago Tribune showed that only 28 percent of motorists
believed that they were actually paying less for gas as a result of the
temporary suspension of the tax. Obama has changed his mind
dramatically on the tax cut since voting for it back in 2000 in
Illinois. On the campaign trail Monday in North Carolina, he described
the proposal as a "short-term quick fix that we can say we did
something even though we’re not really doing anything."
A politician who learns from experience, and doesn’t leap to pander! No wonder he’s become a target.
Kit Stolz 