Wednesday, April 30, 2008

A view on the gas-tax holiday/halting proposal

It may not be popular but I believe it is based in reality. I found this via Reuters. Here is an excerpt that I hope you will take the time to read and then click this link to read the article in its entirety. Believe me, I want to save money but I also have to look at the big picture, not just the feel good moment. I don't there will be any easy answers to what is going on with the economy and no matter who is the next president, there will have to be a lot of compromise and working together between the congress and the President. All three right now have a lot of ideas, getting them to happen once in office is a completely different thing. Anyway, here is the excerpt:

Clinton-McCain gas tax holiday slammed as bad idea

By Alister Bull

WASHINGTON (Reuters) - A gas tax holiday proposed by U.S. presidential hopefuls John McCain and Hillary Clinton is viewed as a bad idea by many economists and has drawn unexpected support for Clinton rival Barack Obama, who also is opposed.

"Score one for Obama," wrote Greg Mankiw, a former chairman of President George W. Bush's Council of Economic Advisers. "In light of the side effects associated with driving ... gasoline taxes should be higher than they are, not lower."

Republican McCain and Democrat Clinton, who is battling Obama for their party's nomination, both want to suspend the 18.4-cents-per-gallon federal gas tax during the peak summer driving months to ease the pain of soaring gas prices. The tax is used to fund the Highway Trust Fund that builds and maintains roads and bridges.

Economists said that since refineries cannot increase their supply of gasoline in the space of a few summer months, lower prices will just boost demand and the benefits will flow to oil companies, not consumers.

"You are just going to push up the price of gas by almost the size of the tax cut," said Eric Toder, a senior fellow at the Urban-Brookings Tax Policy Center in Washington.

Obama criticized the plan as pure politics and said the only way to lower the price of gas is to use less oil.

"It would last for three months and it would save you on average half a tank of gas, $25 to $30. That's what Senator Clinton and Senator McCain are proposing to deal with the gas crisis," he said on Tuesday in Winston-Salem, North Carolina.

"This isn't an idea designed to get you through the summer, it's an idea designed to get them through an election."