Clinton Joins McCain on Plan to Suspend Gas Tax

Apparently, Sen. Hillary Clinton is not an avid reader of KickingTires.

If she were, she would know that we — along with many other news sources — pointed out that Republican presidential nominee John McCain's plan to suspend the federal gas tax over the summer was a pandering exercise in futility.

As we previously wrote, the plan would take more than $9 billion away from the nation's highways, as well as 300,000 highway jobs, all to save the average American consumer a whopping $28 at the pump from Memorial Day to Labor Day.

To her credit, Clinton at least wants to make up for the revenue shortfall by imposing a windfall-profits tax on oil companies rather than tacking it onto the national debt, as McCain would do. Oil companies have been raking in record profits. Today, Shell and BP both reported record net incomes of $9.08 and $7.62 billion for the first quarter.

Clinton's plan also presumes that lowering gas prices will give consumption a boost, while we think people are already well on their way to changing their driving habits. The 18 cents a gallon federal gas tax would lower today’s record high of $3.61 nationally back down to $3.43, which may have a psychological effect on drivers. But what happens come fall if prices haven’t stabilized, the tax comes back and drivers are yet again shell-shocked? Who will they blame after the primaries are over?

KickingTires is not a political blog, but we feel it is our duty to point out the flawed logic here. For the record, the other Democratic contender, Sen. Barack Obama, has come out against the Clinton and McCain plans (despite supporting a suspension of the Illinois gas tax when he was in the state legislature in 2000) for exactly the same reasons we point out here. He must subscribe to our RSS feed.

Democrats Divided Over Gas Tax Break (The New York Times)

Comments

[Jack Greenberg]

"As we previously wrote, the plan would take more than $9 billion away from the nation's highways, as well as 300,000 highway jobs, all to save the average American consumer a whopping $28 at the pump from Memorial Day to Labor Day."

I'm not surprised that Cars.com would print such nonsense. I applaud Hillary for joining to suspend the tax even if it's temporary. Passing any windfall tax on the oil industry will not lower gas prices as it's a supply and demand issue.

More nonsense; "In fact, suspending the gas tax right now makes very little sense. The U.S. already has one of the most insubstantial gas taxes in the world among industrialized countries. If you go over to Europe right now, you'll be lucky to pay less than $8 American for a gallon of gas. Across Europe, 60% of what drivers pay on gas goes to taxes."

So the idea is to follow the lead of the Europeans who have proven that you cannot tax a society into prosperity?

I understand that Cars.com is attempting to establish itself as a quality car source, however if you cannot properly vett a subject and state facts, you should stick to reviewing cars.

Jack Greenberg
Economic Policy Advisor for a West Chester, PA think tank and a life long car nut and Democrat.

[Larry Wigger]

Windfall profit taxes??? Come on...leave the economic analysis and political commentary to others! For the record, take a look at this year's Fortune 500. The only oil company to earn a doubled-digit profit was Exxon Mobil with 10.9%. By your logic, we'll also need to hit GE, Bank of America, Berkshire Hathaway, JP Morgan Chase, Goldman Sachs, Proctor & Gamble, Johnson & Johnson, and Wachovia, all of whom earned a higher profit margin than Exxon Mobil and that's just the top 40.

[woogie]

Yes maybe we should follow the Europeans and tax the hell out of gas. Then use the revenue to repair our transportation infrastructure which is in miserable shape. We've got interstate bridges falling into rivers.

Considering the reason gas costs so much is the decline of the US dollar against the Euro maybe they are taxing themselves to prosperity. At least taxing themselves to well maintained road, viable mass transit and universal health care.

[Jordan Arnold]

Both Reagan and Clinton proved that less taxation results in increased revenue flowing into the Treasury. A tax break is simply the government letting you keep more of the money that YOU earned. Europe has high taxes, high unemployment and the least amount of upward economical class movement. That's why liberal countries like France and Italy have recently elected (in Italy's case re-elected) conservative leaders.
I've spent many years working in Europe and Asia and can say that regardless of whom our president is, what circumstances we are involved in, it's damn good to be an American living in this country. It is in many ways the winning lottery ticket.

I came across Cars.com based on a recommendation from a work colleague and really enjoy the site. Perhaps if this was China we may not even have the right to view such a site. Kind of puts things into perspective.

[Tony]

I don't care about political part.
I know that if gas will be cheap again irresponsible car makers will produce unefficient vehicles and irresponsible people will buy them and drive without good reason.
So, I say keep the gas as expensive as possible. Kill large vehicles, hurry technological development, clean up environment.

[Mart]

Irrespective of our differing political viewpoints, is anyone arguing the point that cutting gas tax will only save the avergae family $28?

If not, and the article is correct in that assumption, how can we view the proposal to cut the tax temporaily as anything other than token gesture politics?

And of course, even if they knock 20cents off the gallon, does anyone think that gas prices will not keep rising? What happens in October when gas is already up to today's levels again, and the government has to reintroduce the gas tax?

Being a european living in the usa, i love the lifestyle here, but do think we are undertaxed in general. If gas taxes are what fund road maintenence, then if the example of Chicago is anything to go by, the taxes needed to be increased 10-fold if we are to avoid the prospect of HAVING to drive SUVs just to navigate our farmers track style roads!

[Dave T.]

I think our point was really a temporary fix for the summer won't change driving habits, won't save people money and may -- when it ends -- shock them even more when it is reinstated.

[ziggy]

It's funny how nobody ever talks about the massive oil reserves in North Dakota and Pennsylvania that we have never tapped into or the fact that our coal reserves can produce more synthetic oil than the rest of the worlds total oil supply. Our gas prices keep rising but yet we are capable of being oil independent. Just seems odd.

[Tony]

ziggy,
It doesn't matter what oil reserves we have. the cost of barrel on the world market does.

[ziggy]

The cost doesn't matter if we're not using middle east oil.

[Mart]

Do you think that oil from Dakota will not be sold to China if they are willing to pay for it?

[Matthew]

Mart,
The answer is No. Oil produced in North America has a price advantage v. shipping it overseas. That's why Canada is our #1 provider of oil. There is less risk and cost in selling domestically than internationally even when you can get a higher price.

[ziggy]

The point is the U.S (and Canada) has the resources (oil currently produced, untapped oil reserves, projected oil reserves and coal for synthetic oil) to be energy independent for the next 200 years. We have the technology and can even capture the CO2 emissions. We do need more refineries. I don't understand why we don't do it. Is it that we want to wait for the rest of the world to run out before we use our own? Some projections predict that current middle east oil reserves could run out in 15 to 25 years. Is this what we're waiting for?

[Bloke]

How do we have enough resources to be energy independent for 200 years when some scientist estimate we will be out of oil in the next 40 years at the current rate? We do you get your information from ziggy?

[ziggy]

Those estimates your talking about are for using current "tapped" reserves. Yes the middle east oil is estimated to run out in about 15 to 25 years. The U.S. has known reserves in a Alaska and other northern states that they haven't even tapped that can produce almost 1 trillion barrels of oil and we have enough coal reserves in Montana alone to produce 100 years worth of synthetic oil (for U.S. use. Then there are other areas in the U. S. that are suspencted to have oil that we haven't tested.

[Tony]

We need to promote conservation, not consumption.
Cheap gasoline is not good for us. the government doesn't regulate enough. I believe that there is no reason for Joe Doe to drive a large vehicle (of his dream) and pollute my air. Make a law, tax $2000 per year per cylinder over 4 cyl. And you will see more and more smaller cars. And you wouldn't be afraid that a truck will hit you because there will be no trucks.
But no cheap gas please. Roads are too congested as it is.

[Q1]

I agree w/ Tony. Tony for president!

[ziggy]

Sure let's tax everyone that owns a truck. That makes a lot of sense. Tax the person that builds the houses or does your electrical or plumbing work. Or even the farmer, rancher or semi driver. If you think the costs of goods or services have gone up now because of the increase in gas costs impose this cylinder tax on trucks and the costs will go through the roof.

Bloke -
Here is information on the Bakken oil reserve in North Dakota - http://www.nextenergynews.com/news1/next-energy-news2.13s.html
There is also a similar untapped oil reserve in Pennsylvania.

Here is information on Montana's coal reserves and creating synthetic oil.

http://www.nextenergynews.com/news1/next-energy-news2.13s.html

[LM]

Hey Ziggy...those guys can get tax deductions and such for business purposes. We do need to tax people who buy trucks to look cool. I think any car over 3,500 pounds should have a $2,000 weight tax on it.

Or, just screw it and charge a tax based on pounds of CO2 emitted. That would be much more fair.

[Tony]

Ziggy,
don't go into extremes.
Vehicles registered to construction or other businesses shouldn't be taxed, or like LM said, they'll get their money back or deductions. The details can be worked out. But something has to be done so that, for example, my boss, who is single woman with no children, doesn't drive around in BMW X5 with 8cyl engine. May be her status not letting her drive a car of lesser image...
Slap her with annual $5000 and you will see how quickly she'll downgrade.
I love her as a person, but I don't think it is right, especially in current global context, the she drives that car.

[Mart]

My opinion on all those fuel deposits littering the USA is that they shoul dbe left alone. They are non-renewable resources, and I think we are learning that the path for the world lies not in continuing to exploit everything the earth give sus in the search of the cheapest possible fuel, but in finding a renewable energy source so that we don't have to strip the earth bare to continue our lifestyles.

There is an arguement that exploiting the untapped researves will give us more time to find a permanent solution, but i think experience of our culture and also of big business means that instead, all that will happen is we will sit back and relax until THAT gas runs out and we'll be forced to find a panic solution again.

The whole time gas remains cheap there is no political will to change things. When the natives are restless, the politicians will work at finding solutions. At least, in my idealised US society they do!

[ziggy]

I own a business (not one that uses a truck) and anyone that owns a business will tell you that tax deductions are the same as a tax savings. A $2000 deduction may only cut your tax liability by about $200. A tax deduction does not mean you get it all back. It's still an expense. The other $1800 in expense will be passed on to the consumer. You're right that something should be done for the gas guzzlin SUVs and those that own trucks unnecessarily. But to to indiscriminately charge $2000 per cyllinder for over 4 would not fly.

[LM]

Ziggy... if the costs get high then the market will work itself out. They'll get passed to the consumer and it will invigorate the market for more efficient commercial vehicles. UPS/FEDEX and the trucking industry is already exploring hybrid diesels and there is no reason this cannot grow to small business vehicles as well, in a more pronounced manner. The prod needs to be in place though, and high fuel costs is one way to do this.

[ziggy]

When those costs get passed on people will tend to make cuts somewhere else in their lives. Our local news channel just did a piece on the effects of rising gas and food prices. There has been a decrease in restaraunt and movie ticket sales as a result. But I guess in the long run it works itself out but it's the interim that is painful.

[Bowrider]

If consumers are faced with a short-term relatively low per gallon price, demand will go up. As demand goes up, the price of fuel will go up, effectively erasing the tax break. The politicians know this, but they are, after all, politicians.

And, supply side economics, a.k.a. Reaganomics, requires the government to cut spending along with the tax break.

[Mart]

Absolutely. To begin with people maybe cut down on food costs etc, but in the long term people will not be able to keep doing that. It's at that stage, when it becomes time to replace their current car, that they maybe downsize their vehicle.

I hate always comparing this market to the european market, but I will anyway. People manage there. They still have nice cars, they still go out to eat and go to see movies, and they still have a high quality of life. all this despite $8 a gallon gas. And no, not all european towns have good public transport. Most don't, in fact...

What it requires is a change in the public idealogy of what constitutes a good living standard. That takes a long time and some major shifts in perception. However, it will happen as essentially market conditions are forcing it on us.

People will get used to driving a Corolla in stead of a Camry and eventually it'll be the norm, just like paying $7 a gallon gas will be.

[ziggy]

I also hate comparisons to the european market but we always forget about the fact that they have more gov't funded services, i.e.healthcare, they have better mass transit systems, the work less hours in a week, they have access to automobles with high mpg's, etc,etc. I would pay $8 a gallon if I had that system here.

[Mart]

It's one of those chicken and egg things - to have one you must have the other...

None of that stuff comes free. Europeans earn comparitively (although not literally) less and pay higher taxes to pay for all the extra government services and infrastructure.

Americans have proved time and again that they do not want big government "interference" and are scared by the "evil spectre" of supposed socialism. We'd rather let big business carry on making big profits, and watch the roads go down the pan...

This is taking a tangent away from gas pricing, but it's all relevant. We all need to ask ourselves what we really want from our society and from our government. It is possible to have great infrastructure, but it doesn't come for free.

The problem now is that people are being priced out of their cars, but there is no money to create publicly funded alternatives. In hindsight, the government should have hit gas taxes years ago and used the revenue to create decent transport options. It would have meant that people would have changed their behaviours years ago, but at the same time meant that with ever increasing gas prices, those of us who cannot afford to spend more now, had options available to them.

Thats the benefit of looking back i guess...