News and commentary

The Gas-Tax Holiday: Hokey Gimmick or Shameless Ploy?

By Judy Alster
Updated: Wednesday, May 07 2008 12:05:AM

Wednesday . . . Sometimes I take a break from dividend-related topics to throw in a little current events, for example, the news that more than 200 economists, including four Nobel Prize winners, signed a letter rejecting proposals by presidential candidates Hillary Clinton and John McCain to offer a summertime gas-tax holiday.
 
The signatories were a distinguished crew. Columbia University economist Joseph Stiglitz, former Congressional Budget Office Director Alice Rivlin, 2007 Nobel winner Roger Myerson and Richard Schmalensee of the Massachusetts Institute of Technology and a member of President George H.W. Bush's Council of Economic Advisers were among those who called proposals to temporarily lift the tax a bad idea. (For my part I would call them a hokey ploy to get votes.)  The list includes both Republicans and Clinton supporters, a real bipartisan rarity.
 
According to the economists, the moratorium would mostly benefit oil companies while increasing the federal budget deficit and reducing funding for the government highway maintenance trust fund. Clinton and McCain tout the proposal as an example of their concern for struggling middle-class families, though, while Obama estimated it would save the average driver less than $30.
 
The proposal has been rebuffed by such democratic stalwarts as House Speaker Nancy Pelosi and Financial Services Chairman Barney Frank of (probably because of their dim view of anything that would take money out of Congress's hands). One environmental group called the moratorium proposals "sham solutions that won't ease the pain at the pump.''  Rivlin, who headed the CBO before running the White House budget office during the Clinton administration, was among Clinton backers signing the letter.  "I think she was wrong on this one,'' Rivlin said. "If anything, we need higher gas taxes.''
 
Whatever happens, I believe Alice Rivlin to be right. Higher prices at the pump might make alternative forms of energy attractive and begin to wean the U.S. off foreign oil. A country with a more realistic attitude toward energy would be a more interesting place to invest.