The Dumbest Thing

In an effort to boost her popularity amongst middle-class primary voters in North Carolina and Indiana, Sen. Hillary Clinton is supporting a so-called “gas-tax holiday” for the summer. Basically, the consumer burden of the tax on gas will be temporary lifted, leading to cheaper gas prices for the next three months. This measure is also supported by Sen. John McCain but vehemently opposed by Sen. Barack Obama, making the gas issue one of the few points of disagreement between Clinton and Obama. While Sen. Clinton’s ability to distinguish herself in the Democratic race will prove crucial in these coming months, supporting bad policy is not the way to go. A temporary lift of the gas-tax during the summer would only prove more costly in the fall.

First of all, government intervention alters incentives. A tax-lift would just make Americans consume more gas during the summer. Gas is currently so expensive because there is a SHORTAGE; the high prices are there to discourage consumption. Suspending the gas-tax would also be unfavorable to the environment as pollution levels would rise proportional to the price drop. Third, a tax-suspension is projected to cause a loss of nine billion dollars over the summer, money that would normally go towards a fund for the maintenance of highways.

Warning bells should be sounding at the Clinton and McCain camps if such prominent economists as N.Gregory Mankiw (who writes textbooks) are speaking out against the tax lift. Sadly, Clinton and McCain’s grand ideas are more likely to appeal to the voters than Obama’s truth-telling. However, if he can explain himself, the Illinois senator just might come out on top. Obama, in his protest against the tax-lift, seems to be the only economically sane candidate on this issue.

Now, if only he would stop supporting ethanol…