Greg Mankiw passes along this gem from the Washington Times:
John McCain, the presumptive Republican presidential nominee who should know better, was the first presidential candidate to endorse the gas-tax holiday for the summer driving season. Reportedly, the idea originated with a political pollster, not among Mr. McCain's economic advisers.
Such a straight talker that John McCain! He tells you like his pollsters tell him it is! Never mind the facts - if you want to hear it, he'll tell you! So bold! So different!
UPDATE: And while we are on the subject of gas tax economics, today's effort from Paul Krugman is really quite sad. I'll let Peter Dorman explain:
(Krugman) argues that, unlike the differences between Obama's and Clinton's health care plans, their split on gas taxes is minor stuff. Economists are miffed at HC because tax incidence is their lamppost, says Paul, but what to do about high oil prices is second order.
He's got to be kidding.The best that can be said for the gas tax holiday is that, in its Clintonoid version, it is nearly pointless. A few cents per gallon get shifted from federal taxes to oil companies, since price at the pump is largely governed by demand, and then they get shifted back to the government with Hillary's windfall oil profits tax. It is a big, meaningless shuffle that sells itself as populism. Since the dollars more or less end up in the same pockets they start out in, you might say Krugman is right.
But this is not why the vast majority of economists are perturbed. Yes, there is a matter of professional pride at stake, but it is more justified than Krugman is willing to admit. Clinton's proposal, featured in her latest round of TV ads, is transparently dishonest: it promises something she and every reasonably well-informed observer knows to be false. The appropriate analogy is not to disagreements on trade, which Krugman brings up, but to supply-side snake oil, the claim (which McCain seems to be embracing) that cutting taxes raises revenues. The issue is not good versus bad policy, but honesty versus dishonesty. Economists are trained to see the cynicism behind such ploys, and they do a service to call attention to it.
But there is an even bigger issue lurking just beneath the surface. Without a doubt, one of the biggest challenges all of us, in the US and around the world, will face during the coming years is the increasing scarcity and rising price of oil. We will experience this as a threat to our living standards, a barrier to global rebalancing (getting the US trade deficit under control), and perhaps even a trigger for catastrophic military confrontation. (For a blast of sanity on this last point, see Michael Klare.) At the same time, the imperative of reducing carbon emissions will require us to wean ourselves from oil even faster than market forces alone would dictate.
Of course, no rational politician will tell us how he or she plans to get us out of the era of cheap oil. Any discussion of politics has to take place against a backdrop of cowardice and insincerity. That means we have to read the tea leaves, like the current dustup over whether to suspend gas taxes. So what does this "unimportant" proposal say about Clinton's plans for a future oil policy? Taken at face value--and how else should we take it?--it suggests that she will delay measures to reign in demand or even try to subsidize fuel consumption for short term political advantage. Unless this election-year idea is just a charade, it portends a phony populism that places our well-being, and possibly our survival, at even greater risk.
And that's the point: either she's serious, in which case she is well beyond clueless in one of the most crucial policy areas imaginable, or she is blatantly pandering, manipulating the ignorance of voters to her own personal benefit. Either are inexcusable. And yet Krugman excuses them nonetheless.
C'mon Paul - Hillary has said she has no respect for economists. You are one of the brightest economists of your generation. How can you possibly continue to support someone who has so brazenly dismissed your life's work?
UPDATE: Mark Thoma:
To me, the claims being made about this proposal are the same as saying tax cuts pay for themselves. Even if it has popular appeal, even if it wins votes and elections, economists are in wide agreement in saying that the proposal is misleading as stated by the campaign, and generally a bad idea. When literally all the experts around you are telling you that what you are saying is misleading (at best), yet you declare you are going to say it anyway, that's no better than the Laffer curve stuff. Sure, it's not much money, but what if this were attacking Iran instead and she declared she was just going to do it anyway? That's a bigger deal, and refusing to listen to experts - dismissing them as out of touch and elitist - tells us something important...
The point here is that this is a lousy way to help people. It's not that we don't care, or don't understand, it's that we do care and understand all to well and we'd like to see policies put into place that actually have a chance to help people. Promising things that aren't likely to happen - telling people they will get relief when it will likely be a pittance (the $70 figure they cite is not supported by the underlying economics) - simply leads to disappointment and disenchantment with politicians. All we are asking is that promises have a chance to be realized. Let's help the people who need help, but let's do it in a way that is effective rather than in a way that plays off their difficulties and fears, but does not really address their needs.
One of the hallmarks of progressivism, at least in its 20th century version, was the belief that expert opinion could be enlisted to better the lives of average citizens. Current progressives have a much more realistic understanding of things than their forbearers once did, but nevertheless the belief that education, training and expertise matter is still there. Unless you are Hillary Clinton and you need to win an election, I guess.
Remind me why we should consider her to be a progressive again?
UPDATE II: Looks like all the big guns are in on this one. Greg Mankiw:
Paul Krugman thinks all of the fuss about the gas tax holiday has become a bit hysterical. He agrees that the policy is a bad idea, but it is no big deal, so let's not focus on it.
Paul is right that the issue is, quantitatively, small potatoes, but I am nonetheless pleased to see it get so much attention. This issue is like the canary in the coal mine: No one really cares about the canary, but its condition tells us about deeper problems that lie below.Many economic issues (e.g., health care, corporate taxation, the trade deficit) are vastly complicated, with experts holding a variety of opinions. When candidates disagree, it simply means that each is siding with a different set of experts, and it is hard for laymen to figure out which set of experts is right. By contrast, the gas tax holiday is not nearly as complicated, and the experts speak with one voice.
Why, then, are candidates proposing the holiday? I can think of three hypotheses:
Ignorance: They don't know that the consensus of experts is opposed.
Hubris: They know the experts are opposed, but they think they know better.
Mendacity with a dash of condescension: They know the experts are opposed, and they secretly agree, but they think they can win some votes by pulling the wool over the eyes of an ill-informed electorate.
So which of these three hypotheses is right? I don't know, but whichever it is, it says a lot about the character of the candidates.
Is there any doubt that with Clinton it is choice #3?
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