Candidates Bicker on Suspending Gas Tax

Senator Hillary Rodham Clinton endorsed a plan yesterday to suspend the federal excise tax on gasoline, 18.4 cents a gallon, for the summer travel season. Clinton’s proposal was made on Monday as the price of gasoline hit a new record of $3.60 a gallon nationwide, and oil prices flirted with $120 a barrel.

Senator John McCain made a similar proposal two weeks ago, which was rejected by many industry analysts as defying basic economic fundamentals: reducing the price of gas would encourage more consumption. Since the time of McCain’s proposal, the average national price of a gallon of gasoline increased by 20 cents—an amount that exceeds the federal gas tax. The political prospects of getting Congressional approval of the plan are considered slim.

Senator Barack Obama, Clinton’s Democratic rival, said the summer gas tax break would save the average consumer no more than $30. Congressional analysts confirmed that figure. Mr. Obama previously dismissed Mr. McCain’s proposal as a “scheme.” Clinton and McCain are both trying to characterize Obama as out of touch with Americans struggling with higher gas prices. A McCain spokesman said, “It’s clear Barack Obama’s not strong enough to provide immediate relief at the pump.” The Clinton campaign is running television advertising in Indiana contrasting her approach on gas prices with Mr. Obama’s.

Ironically, the Bush Administration is siding with Obama. Dana Perino, the White House spokeswoman, said “it would be disingenuous and unfortunate for American consumers for them to be led to believe that there is a short-term fix” for high gas prices and energy dependence.

While the political candidates continue to use the 18.4 cent gas tax as a wedge issue, the outlook for oil supplies grows more dismal. According to basic economic principles, raising supplies, or lowering demand, are the only ways to reduce the cost of gasoline. The New York Times reported that Jeff Rubin, an analyst at CIBC World Markets, said oil prices might exceed $200 a barrel by 2012—a level which he believes could mean $7 for a gallon gasoline in the United States. Major producers outside the OPEC cartel, like Russia, Mexico and Norway, are having trouble increasing output, despite incentives to open the spigot at a time of high prices.

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  • Jerry

    a temporary reduction of the gas tax is so short sighted. I am surprised Hillary is going this route. McCain seems to be a more environmental friendly republican the W I am suprised at his stance as well. If I was a one issue voter Obama would get mine.

  • Skeptic

    As a D, I’m very disappointed that Senator Clinton has hitched a ride on the Pander Express with Senator McCain.

    Beyond that, sending a $10B bill — the amount of motor fuel tax that would be waived — to everyone’s grandkids to save people $30 over the summer is as stupid as …

    … sending taxpayers a check for $600 …

    with the resulting bill (much more than $10B!!) to those same grandkids.


  • ecd4me

    this proposal is just pandering for votes. I’m not surprised Billary is joining in. One thing left unsaid is that the revenue from the tax is dedicated to highway and transportation projects. If you stop the revenue, then highway spending will add to the horrific deficit we already face. The price has to go high enough and remain there to increase supply and reduce demand. I’m a liberal, but this is just econ 101. There are many alternatives for increasing supply but they all need higher prices to be practical.
    What about rescinding the giveaways to big oil given by Bush and use that money to help fund relief for the driving public.

  • Jeff

    I fully agree with all comments. Now we just need to let Bin Laden blow up Wall Street one more time to save us. It is the a$$ h@!!$ in the business suits causing all this by trading oil futures in a bet that things will get bad not due to any real shortage. Lets increase taxes on the Oil companies directly or suspend oil trading for a while.

  • uktiger

    Shrillary is just another neocon. Bush, Sarkozy, Merckel, Blair, etc.. It is a sad commentary that a recent poll in the US showed that 50% of the citizens didn’t want to pay ANY taxes. Pretty f’ed up.

  • Boom Boom

    Strong in this situation is not proposing a quick fix tax break for gas. Reducing our gas price by 20 cents for a few months won’t get anyone anywhere. Is $3.50 gas that much different than $3.70 gas? At the same time is will clip hundreds of millions off of our transportation budget. This gives me one more reason to like Obama.

  • uktiger

    Since when did cost have anything to do with price? Oil companies will just get the money instead of the government.

  • RandalH

    Oil is a commodity and prices are set by markets, not by the government or by oil companies. Such things as supply, demand, dollar strength or weakness, and political instability in key places help determine its price (along with a goodly portion of speculative trading). Politicians are looking to gain favor with voters by offering some pocketbook relief, which might have a short-term positive effect on the economy. But it’s just as likely to increase demand and cause the price of gasoline to increase to match the tax cut. The only sure way to decrease the price of gasoline is to increase supply (unlikely, unless OPEC is feeling generous) or better, reduce demand. If people just reduced trips and bought smaller, more efficient cars prices would at least stabilize, and they would realize an overall savings on fuel costs.

  • VaPrius

    It’s clear the Obama is the ONLY strong leader among the candidates. Telling people what the NEED to hear instead of what the WANT to hear takes real strength and leadership.

    The price of oil is the sign of real trouble. Yes, investors are affecting the price but they would not be in that market if there wasn’t a situation to take advantage of. A stable, efficient commodities market with no surprises is a poor investment environment. The investors have seen that the oil producers are having trouble producing more oil. More importantly, oil producers are having trouble finding significant sources of new oil. All of that equals oil shortages due to a lack of production capacity and high demand.

  • Need2Change

    What a dumb proposal.

    Increases consumption.

    Increases the federal deficit.

    Reduces the ability of governments to maintain current roads, remove snow, and fund new construction.

    If anything, highway taxes should be increased.

  • Milwaukee T

    How about suspending or cutting the taxes on biofuels (please, spare me the anti-biofuel stuff – in the end it’s still better, especially gen2 biofuels), increasing the tax rebates on alternative vehicles and gradually RAISING the taxes on gasoline and straight diesel??

    That would be forward thinking…

  • Sammy thinks alot

    I think everyone is stupid. First people b#tch about going to war with Iraq to get their oil. So where are we now? We have their oil, and I pay more at the pump now than ever before. Maybe we didn’t go to Iraq to get some oil. Maybe the loons were wrong. Maybe if they were wrong on one thing, they will be wrong on others. Maybe putting $600 bucks per person out there will stimulate the economy. Just maybe…….

    Anyways that was directed at that idiot a few comments above me. Sorry to rant. Now about Johns idea of lifting the gas tax. Yea thats pretty damn stupid too. I just wish we had a better choice of people to represent the U.S. next besides Oboma bin Laden, Billary, McLame. These people should be clowns because they all make me laugh.

  • steved28

    We need a presidient who will challenge us, like Kennedy did when he challenged us to get to the moon in a decade. People thought he was crazy and it was not within reason. Engineers developed propulsion systems that relied on items not yet invented, but they knew were possible. We haven’t had a decade of such innovation since. “Ask not what your country can do for you” . Those words need to be resurrected.

  • Deanne#1

    Ha Ha Hilary You Suck Vote For Obama!

  • Deanne#1

    Ha Ha Hilary You Suck Vote For Obama!

  • Nene

    You’re sooo right!