(Artwork courtesy of BuzzFlash.org The John McCain for President, Hillary Clinton for Vice President War Party Fusion Ticket | BuzzFlash.org)
Sen. John McCain has proposed a gas tax holiday for this summer, suspending the 18.4 cent-per-gallon federal gasoline excise tax and the 24.4 cent-per-gallon federal excise tax on diesel fuel between Memorial Day and Labor Day.
Not wanting to be outdone Sen. Hillary Clinton, like Arnold Horshack on the old sitcom Welcome Back, Kotter, waved her hands wildly and shouted "Oh! Oh! Senator McCain! Me too! Me too!"
The McClinton gas tax holiday gimmick is a blatant act of political pandering and a clear demonstration of poor policy judgment by both candidates.
The federal excise taxes are collected from the oil companies at the point of manufacture, and are passed on to consumers in the retail price of gas or diesel fuel that you pay at the pump. The federal excise taxes are a dedicated tax, meaning the taxes are dedicated to the Highway Trust Fund, which is the primary source of funding for highway infrastructure maintenance and construction.
Suspending the federal excise taxes will only benefit the oil companies who will pocket the tax savings, at a time when the oil companies are enjoying astronomical profits. In the unlikely event that the savings are actually passed on to consumers, congressional analysts estimate that the savings to the average consumer would be no more than $30. It wouldn’t pay for a tank of gas today.
The price of crude oil and retail gas prices will continue to rise this summer for a number of reasons, among them increasing global demand for oil, the summer peak demand for gasoline, declining crude oil supplies, an aging oil refinery infrastructure in the U.S. which is producing at maximum capacity, the investor speculation "bubble" in the commodities market, and a major reason – the rapidly declining U.S. dollar (to which crude oil prices are pegged). Throw in a military confrontation with Iran that McCain and Clinton appear to be salivating over, and all bets are off.
The immediate impact of suspending the federal gasoline excise tax would be the loss of an estimated $9-10 billion in tax revenues dedicated to the Highway Trust Fund, and the resulting impact of the loss of an estimated 300,000 jobs in the highway construction sector. See Democrats Divided Over Gas Tax Break – New York Times Not a wise policy decision at a time when the country is in a recession.
As columnist Thomas Friedman recently noted in Dumb as We Wanna Be – New York Times:
"This is not an energy policy. This is money laundering: we borrow money from China and ship it to Saudi Arabia and take a little cut for ourselves as it goes through our gas tanks. What a way to build our country.
When the summer is over, we will have increased our debt to China, increased our transfer of wealth to Saudi Arabia and increased our contribution to global warming for our kids to inherit.
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We have no energy strategy. If you are going to use tax policy to shape energy strategy then you want to raise taxes on the things you want to discourage — gasoline consumption and gas-guzzling cars — and you want to lower taxes on the things you want to encourage — new, renewable energy technologies. We are doing just the opposite."
Our nation’s infrastructure is crumbling from years of neglect and under-funding, largely because of Republican opposition to increasing the federal excise tax on gasoline and diesel fuel to keep pace with actual needs for new highway construction and maintenance of aging infrastructure over the years. By comparison, Europeans who pay some of the highest prices for gasoline pay a fuel excise tax of approximately $2 dollars-per-gallon.
Sen. McCain’s lame-brain idea has drawn criticism from his home state newspapers (I’m shocked!) who rightly dismissed his idea for being the political pandering it is. McCain’s clunker (The Arizona Republic April 16, 2008), and McCain’s gas tax repeal idea full of hot air | www.azstarnet.com ® (Arizona Daily Star April 21, 2008). Sen. Clinton likewise has drawn criticism for her political pandering The Gas-Guzzler Gambit – New York Times (New York Times, May 1, 2008).
The McClinton gas tax holiday gimmick will never see the light of day in the current Congress. It is dead on arrival. So is Clinton’s proposal for a renewed "windfall profits tax," which will have to await the next Congress.