5/03/2008

Energy, the Environment, and Political Hypocrisy

One of the more interesting political sideshows last week concerns the federal gas tax, which is assessed by the federal government to pay for the nation's transportation infrastructure. Revenue generated by the gas tax pays for new roads, tunnels, and bridges; repairing old or damaged ones; and conducting research to determine how and where to build new ones. Currently, the federal gas tax is 18.4 cents per gallon.

Obviously, the more gas you buy, the more you pay in gas taxes. Some liberals have suggested increasing the gas tax as a way of driving down demand. This, they argue, would result in a cleaner environment and less dependence on foreign sources of oil. It's hard for politicians to not be in favor of either of these issues, especially the latter one because there is a major national security advantage to not having to rely on oil from nations that are either unstable or hostile towards the United States. Both John McCain and Hillary Clinton have stated countless times that they are in favor of reducing the United States' dependence on foreign oil. But curiously, both presidential candidates have advocated repealing the federal gas tax for the summer. John McCain has called for a suspension of the tax from Memorial Day to Labor Day. Hillary Clinton wants to introduce a gas tax holiday bill that would temporarily repeal the tax for consumers and offset it with a tax on energy companies to make up for the lost revenue.

For both McCain and Clinton, proposing a gas tax holiday seems like good politics. However, it must be said that this also makes for lousy policy and reeks of hypocrisy.

Here's why a gas tax holiday seems like a political winner. Everybody knows gas prices are going through the roof. Gas is two or three times more expensive now than it was seven or eight years ago. And money that people are spending on gas is money that is not being spent on local businesses, televisions, restaurants, and hotels. So the perception that a politician wants to take real, tangible steps to ease the pain at the pump seems like it would go over well with voters.

Hillary Clinton does not want to be seen as opposing a tax cut and presumably would want to blunt McCain's political advantage on this issue in the general election. And because Democrats are not known for cutting taxes, this could potentially go over well with voters who may be pleasantly surprised to hear Hillary Clinton of all people on the side of the taxpayers. This also buttresses the perception that she, not Barack Obama, is more in touch with average voters because Obama does not support repealing the gas tax. Working-class voters will look at Hillary Clinton and think that her idea to repeal the gas tax will allow them to make their family trip to Grandma's house, an amusement park 200 miles away, or a weekend vacation in the mountains a little more affordable.

And for John McCain, he gets to tell voters that he's trying to cut taxes. As a Republican, taxes will always be too high. So advocating a suspension of the gas tax even if it doesn't become law allows him to say he tried to cut taxes like a good Republican should to help all Americans, but had his proposal blocked by the "tax-and-spend" Democratic Congress.

But like I mentioned earlier, pushing for repealing the gas tax is intellectually dishonest and blatantly hypocritical. Many people have already criticized this idea (here and here). One common theme of these criticisms is the idea that the lost revenue could cost hundreds of thousands of construction jobs. Less tax revenue means less money for road projects. Less money for road projects means fewer projects to go around. Naturally, fewer projects will require fewer workers to complete these projects. And if fewer workers are needed, then that means some people will have to find another way to earn a paycheck. Conservatives in particular would counter that lower taxes would increase revenue, but several prominent conservatives and economists disagree in this case.

A more obvious criticism is the fact that lower gas taxes and reducing our dependence on foreign oil simply cannot coexist. By making gas more affordable, that will encourage more consumers to buy more gas, which is bad news for the environment that both McCain and Clinton claim to want to protect. In turn, this cheaper gas will decrease supply and ultimately lead to higher gas prices. How can Hillary Clinton and John McCain talk about the importance of energy independence if the gas tax holiday they propose will only make this nation more dependent on the very nations we're trying to gain energy independence from?

A final criticism is the idea that repealing the gas tax will not save consumers much money. With an 18.4 cents/gallon gas tax, buying 20 gallons of gas means paying $3.68 in federal gas taxes. If a consumer buys 20 gallons of gas every week for the roughly 14 weeks between Memorial Day and Labor Day, that would save consumers a grand total of $51. Three or four trips to Domino's Pizza would easily offset this. So in short, Barack Obama has it right when he says this gas tax holiday is a gimmick.

This is where the second element of hypocrisy comes in that not a lot of people are talking about. Any discussion of weaning the United States off of foreign oil is usually met by calls from conservatives to drill for domestic sources of oil, such as in Alaska, in the Western states, and off the coasts of Florida. Another popular conservative solution is to build more oil refineries.

However, it seems that conservatives are quite conservative when it comes to money, but not when it comes to energy. Merriam-Webster defines conservative as "marked by moderation or caution." One of the more popular analogies I hear conservatives use to explain their political philosophy is the example of having a canteen of water in the desert. Instead of drinking it all quickly, they use their water conservatively because they don't know how long they will be in the desert. Political conservatives commonly criticize people for not living within their means, for not saving their money, and for not being prepared for when disaster strikes. Conservatives' criticisms of those affected by Hurricane Katrina and the mortgage crisis tend to reflect these themes. ("Why didn't they save their money? Why are they living in such an expensive house? Why didn't they cut down on their spending?")

These criticisms are well founded. So why do these conservatives not advocate energy conservation? Rather than just drilling for more oil, why don't they recommend driving less or driving more fuel efficient vehicles? Drilling for oil in Alaska or building a new oil refinery will take several years, and like all natural resources, there is only a finite supply of oil deposits available. So that's akin to kicking the can down the road. However, it is easy to use less gas now. Another solution is to increase fuel efficiency standards for new vehicles, but that's commonly opposed because it would presumably cost American jobs and make American cars less competitive because of higher costs. (Never mind the fact that fuel-efficient imports are slowly taking over the American auto market.)

Driving less, using public transportation, biking, carpooling, and using more fuel-efficient vehicles would decrease demand, reduce the amount of foreign oil we use, and presumably lower prices while benefiting the environment--all benefits that could be enjoyed far sooner than simply more drilling. This would seem to paint John McCain in particular as even more of a hypocrite because in addition to advocating a policy that would only further reduce supply, continue our dependence on foreign oil, and harm the environment as an unintended consequence, he is also advocating a position that flies in the face of what conservatism purports to represent.

It seems that when it comes to energy, liberals are more conservative than conservatives themselves. And as for the presidential race, even though Barack Obama may be taking the politically riskier position by not supporting repealing the gas tax, he appears to be dead right on the merits.

9 comment(s):

Brett said...

Not to mention that Barack Obama has experience in this area; when he was in the Illinois State Legislature, they temporarily suspended the gas tax back in 2001. It did little to lower prices (there was a small drop, but it was pretty much insignificant), and resulted in dislocation for infrastructure funding (they eventually ended the holiday because of difficulty replacing the revenue).

Clinton really deserves the biggest part of the flack here, because she's openly gimmicking here. McCain at least has the decency to say it was just a minor relief effort that could be made up with other revenue from the treasury; Clinton tied it to a "windfall profits" tax that she must know has exactly zero chance of getting passed at all, much less in time for this tax holiday she's proposing.

For that matter, although this is a tangent, why a "windfall profits" tax at all? Do we really want to punish corporations with at least some ties to the United States (like Exxon) inadvertently to the benefit of the government-run companies like Saudi Aramco?

Torrance Stephens bka All-Mi-T said...

gimmick is the right word

Nikki said...

McCain himself said it was a band-aid and a "gimmick" but claimed it was better than doing nothing. It would ease up gas prices for the summer and keep the economic benefits of travel and vacation rolling along. :)N

Brett said...

It's not "better than doing nothing" if it messes up the distribution of highway and infrastructure funding. Besides, it barely lowered the price of gas in Illinois in 2000, for example:

http://blog.washingtonpost.com/fact-checker/2008/04/a_holiday_from_gas_prices.html#more

Nikki said...

You win...Brett for President. :)N

Anthony Palmer said...

Do any of you remember how Congress was proposing a $100 rebate to offset high gas prices about three years ago? I think former Senate Majority Leader Bill Frist of Tennessee proposed that. That idea was poorly received by voters because they thought it reeked of political pandering and made it seem like Congress was trying to "buy" the voters.

Knowing this, I'm surprised there hasn't been as much outrage over suspending the gas tax this summer, especially since it would save consumers far less than the $100 the GOP Congress was proposing three years ago.

DB said...

Don't you think the $600 rebate check they are already sending out will be plenty of extra money to offset the gas prices? Why are they playing politics with taxes with temporary solutions? No wonder Senators hardly ever get elected to Pres. This is ridiculous pandering.

By the way, if it matters, 200 economists signed a letter denouncing this plan. It is time for real solutions to problems.

The article is on Drudgereport.com.

Anthony Palmer said...

DB,

I'm surprised nobody has mentioned the $600 tax rebate checks. But I'll tell you something. Hillary Clinton knows how to play politics with this gas tax issue. Even though it's an intellectually dishonest proposal, she is using it to show that she has her finger on the pulse of voters who are feeling the economic squeeze. She says, "I don't know about my opponent, but I know $20 means a lot to people." It's the whole symbolism she creates with her remarks. Obama, unfortunately, looks like he's trying to give voters an economics lesson and comes across not understanding the concerns of poor and middle-class voters even though I think he's actually RIGHT on the policy.

Oh, and welcome to the blogroll!

DB said...

Clinton is pure politics, only second best to her husband and this gas-tax "holiday" is classic. It is unfortunate that in today's ever so educated (well, at least with the information so close at hand) that shameful, dishonest politicians can get away with stunts like this. This is manipulation at it's worst.

Thanks for the blogroll add. Much appreciated!