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I'd have to say that for all the different ways that the Clinton campaign has irked me over the course of this campaign, for the most part Hillary Clinton has avoided putting out specious policy proposals that might compromise the progressive agenda.  While there have been a couple of exceptions -- I think her proposed mortgage rate freeze, for instance, is terrible economics -- in general I have agreed with the vast bulk of her domestic policy proposals.  For the record, I also think she's in the right headspace on the issue of health care mandates, although if you get into the economic nitty-gritty, I think there are decent arguments that implementing mandates without overhauling privatized medical insurance might not have the desired effects in terms of passing savings along to consumers.

That's why I've been particularly disappointed by one of Clinton's most recent policy proposals.  Actually -- it wasn't a Clinton policy proposal, but it began as a John McCain policy proposal: a summerlong moratorium on the gas tax (I refuse to use the Luntzian euphemism 'holiday').  Clinton has decided to piggyback on McCain's proposal, and is running commercials in Indiana to that effect:

There are few issues on which you'll find a broader consensus of economists, environmentalists and policy-makers: the gas tax is a good idea.  Lowering or suspending the gas tax would be a bad idea.  In fact, the gas tax should almost certainly be raised.  If you want to get some sense for the broadness of the consensus on this issue, take a look at where the McCain proposal is receiving criticism from.  Texas Senator John Cornyn, who is not only one of the most conservative members of the Senate but who also comes from one of the largest oil-producing states, has repudiated the proposal.  So has Kit Bond. And the Wall Street Journal has been firmly advocating for a gas tax increase for several years.  

I should pause here to note that, as Cornyn and Bond have noticed, funds received from gas tax receipts are earmarked specifically for bridge and highway construction, and mass transit programs.  Suspending the gas tax for the summer would mean the loss of approximately $7.1 billion in Federal Highway Funds, and an additional $1.8 billion in mass transit funds, an amount that would almost entirely offset Clinton's proposed $10 billion increase in infrastructure reinvestments.  The construction industry (admittedly, a self-interested party) also estimates that it could lead to the loss of tens of thousands of jobs.  And I shouldn't need to remind you that there are few better ways to stimulate an economy on the brink of recession than large public works programs.  

But few analysts have argued more persuasively against the idea of a gas tax moratorium than Paul Krugman.  This issue is right in Krugman's wheelhouse: it's bad economics, bad policy, and bad politics.  

Of course, Krugman hasn't had the druthers to come out against the policy now, when the junior senator from New York has begun to advocate for it.  But he sure came out against the policy in 2000, when George W. Bush advanced a similar proposal on the campaign trail almost exactly eight years ago. Let me reprint some of the more persuasive sections in Krugman's 3/15/00 editorial in the New York Times.

Teachers of economics cherish bad policies. For example, if New York ever ends rent control, we will lose a prime example of what happens when you try to defy the law of supply and demand. And so we should always be thankful when an important politician makes a really bad policy proposal.

Last week George W. Bush graciously obliged, by advocating a reduction in gasoline taxes to offset the current spike in prices. This proposal is a perfect illustration of why we need economic analysis to figure out the true "incidence" of taxes: the people who really pay for a tax increase, or benefit from a tax cut, are often not those who literally fork over the cash. In this case, cutting gasoline taxes would do little if anything to reduce the price motorists pay at the pump. It would, however, provide a windfall both to U.S. oil refiners and to the Organization of Petroleum Exporting Countries.

So the gas tax means little relief for consumers -- and lots of relief for OPEC.  Keep in mind that demand for gas is relatively inelastic: consumers think they need to purchase a certain amount of gas, whereas there is an inherently limited supply.  The confluence of these two facts means that the oil companies will tend to charge consumers what they can get away with (hence, their record profits), and so if taxes are lowered, that just gives them more of a margin to capture those high prices as profits.  

This gets into Krugman's next argument.  Never mind its downside -- a short-term gas tax moratorium wouldn't even accomplish what it's intended to accomplish:

Let's start with why the oil cartel should love this proposal. Put yourself in the position of an OPEC minister: What sets the limits to how high you want to push oil prices? The answer is that you are afraid that too high a price will lead people to use less gasoline, heating oil and so on, cutting into your exports. Suppose, however, that you can count on the U.S. government to reduce gasoline taxes whenever the price of crude oil rises. Then Americans are less likely to reduce their oil consumption if you conspire to drive prices up -- which makes such a conspiracy a considerably more attractive proposition.

Anyway, in the short run -- and what we have right now is a short-run gasoline shortage -- cutting gas taxes probably won't even temporarily reduce prices at the pump. The quantity of oil available for U.S. consumption over the near future is pretty much a fixed number: the inventories on hand plus the supplies already en route from the Middle East. Even if OPEC increases its output next month, supplies are likely to be limited for a couple more months. The rising price of gasoline to consumers is in effect the market's way of rationing that limited supply of oil.

Krugman concludes by accusing Bush of knee-jerk conservatism -- which, while not such a remarkable thing when the candidate is George W. Bush, would be a remarkable thing to say about Senator Clinton.  But Clinton's proposal is nearly identical to Bush's.

But anyway, the gasoline tax is dedicated revenue, used for maintaining and improving the nation's highways. This is one case in which a tax cut would lead directly to cutbacks in a necessary and popular government service.

You could say that I am making too much of a mere political gambit. Gasoline prices have increased more than 50 cents per gallon over the past year; Mr. Bush only proposes rolling back 1993's 4.3-cent tax increase.

But the gas tax proposal is nonetheless revealing. Mr. Bush numbers some of the world's leading experts on tax incidence among his advisers. I cannot believe that they think cutting gasoline taxes is a good economic policy in the face of an OPEC power play. So this suggests a certain degree of cynical political opportunism. (I'm shocked, shocked!) And it also illustrates the candidate's attachment to a sort of knee-jerk conservatism, according to which tax cuts are the answer to every problem.

The long and short of a gas tax moratorium is that it will take money away from bridge, highway, and mass transit construction funds and give it to the oil companies.  It's hard to think of a single policy that makes less sense in a slumping, oil-sick economy, or that does less to advance the progressive agenda.  

And that's not even to mention the environmental externalities that result from encouraging the use of gas, which in the long run is the most important consequence.  I have been worried for a long time that Clinton does not treat the environment as a serious priority, and will be quick to sell it out if it buys her political capital elsewhere.  I would remind you that under her husband's administration (for all of Al Gore's good intentions) there were virtually zero serious environmental regulations passed, and that we lost eight critical years in the fight against the climate crisis.  

Even if you just look at the specific issue at hand, at some point over the course of the next administration, we are going to want to devote attention to raising the gas tax as a way to discourage the consumption of fossil fuels.  What sort of moral standing would a President Clinton have to advocate  for such an increase now?  The henchmen of the oil and gas industry would merely need to remind the country that Clinton had thought that lowering the gas tax was a good way to placate the decent, hard-workin' folk in Indiana, and she would be fighting an unwinnable public relations battle.  As with her saber-rattling on Iran, Clinton has now begun to put forth proposals that are not only bad policy on their face, but which will also have tangible consequences for what she would be able to accomplish under her Presidency.  

I would encourage you to e-mail Mr. Krugman, and motivate him to give his readers a refresher course on just what a terrible idea the gas tax moratorium is. And I would encourage you to talk to those friends you have that are still considering supporting Senator Clinton in the primary,  and give them some sense for where her priorities lie when it comes to scoring political points, versus reducing our dependence on imported fossil fuels and reinvesting in our nation's infrastructure.  

UPDATE: Just after I finished posting this, I noticed that Kurgman's Monday editorial has just come across the wires.  And he addresses the issue of the gas tax moratorium!  Only, he addresses it entirely in the context of Senator McCain - and neglects to note that Clinton has put forward the exact same proposal.  Here are his words:

If truth be told, the McCain tax plan doesn’t seem to embody any coherent policy agenda. Instead, it looks like a giant exercise in pandering — an attempt to mollify the G.O.P.’s right wing, and never mind if it makes any sense.

The impression that Mr. McCain’s tax talk is all about pandering is reinforced by his proposal for a summer gas tax holiday — a measure that would, in fact, do little to help consumers, although it would boost oil industry profits.

More and more, Mr. McCain sounds like a man who will say anything to become president.

One could plug in "Mrs. Clinton" wherever we see "Mr. McCain" in the concluding couple of sentences, and the argument would have the same moral force.  But Mr. Krugman does not seem much interested in intellectual honesty these days.

UPDATE #2: Let me preempt/disclose one additional point here, which is that in 2000, Obama voted in favor of a similar proposal in the Illinois State Senate, which temporarily reduced the state's gas tax from 6.25% to 1.25% percent.  The policy passed the State Senate 50-0, with 6 present votes.  There is a good backgrounder on this point here.

While from my standpoint, almost any policy that encourages fossil fuel consumption is bad thing, there is a very important economic distinction between the Illinois gas tax and the federal gas tax.  Namely, the Illinois gas tax is assessed on a percentage basis, whereas the federal tax is assessed on a flat, per-gallon basis.

What that means is that when gas prices go up, Illinois will be making more revenue from its gas tax.  In 2000, gas prices spiked in Illinois by about 50%, and so the state was bringing in far more revenue from the gas tax than it has anticipated.  Thus, it might have been "fair" to give consumers a break; they had already paid about nine months' worth of the state's usual gas tax receipts in the first six months of the year.

However, this is not true of the federal gas tax.  In fact, the federal government will bring in less revenue from the gas tax when prices go up, because the price increases will somewhat curb demand (it's also worth noting that the federal gas tax has not been re-indexed to inflation in about a dozen years, when the last increase was signed into law by Bill Clinton).  So, at the very least, there was not the issue in Illinois about a budget shortfall resulting from the gas tax suspension, whereas that very much would be a problem at the federal level.

UPDATE #3: If you're feeling particularly wonky, this MIT paper studied the effect of gas-tax suspensions in Illinois (the one Mr. Obama voted for) and Indiana that went into effect in the summer of 2000.  The authors found that, while the tax was cut by 5% in both states, retail prices only decreased by 2.7%.  So only about half of the tax decrease was actually passed through to consumers, with the rest contributing to profits in the petroleum industry.  For most other commodities, pass-through rates often approach or even exceed 100%.

Originally posted to poblano on Sun Apr 27, 2008 at 09:33 PM PDT.

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  •  tip jar (224+ / 0-)
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    fivethirtyeight.com: electoral projections done right.

    by poblano on Sun Apr 27, 2008 at 09:33:35 PM PDT

    •  Great work, as usual.(n/t) (18+ / 0-)

      "Behold, I send you forth as sheep in the midst of wolves: be ye therefore wise as serpents, and harmless as doves." Matthew 10:16

      by Setrak on Sun Apr 27, 2008 at 09:35:39 PM PDT

      [ Parent ]

    •  Nice work (19+ / 0-)

      Anybody doubt that if Obama had jumped on the gas tax bandwagon, Krugman would have been slamming him?  

      Ever get the feeling you've been cheated?

      by johnny rotten on Sun Apr 27, 2008 at 10:12:30 PM PDT

      [ Parent ]

    •  Wow. (7+ / 0-)

      Epic pwn on Krugman. Poblano FTW.

      I'm getting seriously annoyed with the Krugster's increasingly obvious partisan bent. We all owe him for staying prog back in the dark days after 9/11, but this is getting into Broder territory. C'mon.

      •  I'd still call Krugman progressive (1+ / 0-)
        Recommended by:
        Judge Moonbox

        He does seem to like Hillary better than Obama, but a lot of that seems to be because her economic proprosals are more specific than Obama's, and Krugman agrees with most of the specifics.  

        We're all pretty strange one way or another; some of us just hide it better. "Normal" is a dryer setting.

        by david78209 on Mon Apr 28, 2008 at 06:23:31 AM PDT

        [ Parent ]

        •  Life is like a Tom Cruise movie. (1+ / 0-)
          Recommended by:
          david78209

          Tom Cruise has made a number of movies where the first opponent you see isn't the real antagonist. He's gone to that well often enough that Roger Ebert listed it as an element of the "Tom Cruise formula movie."

          You give me the impression that what happens in November doesn't matter, it's all about beating Hillary.

          The point of today's Krugman column was that McCain's economics advisor, Douglas Holtz-Eakin, wants us to judge McCain's tax policy by comparing it to Bush made permanent; and Krugman says that we should take the sunset provision Bush cynically stuck in there seriously.

          A more accurate moniker might be... the Loch Ness Social Anxiety Creature. -Satchel, Get Fuzzy.

          by Judge Moonbox on Mon Apr 28, 2008 at 06:51:48 AM PDT

          [ Parent ]

    •  the infrastructure/jobs angle is the key; (1+ / 0-)
      Recommended by:
      bigmikek7

      Obama could make much hay out of this, if he feels like he's done pandering to the Fox crowd (who will scream bloody murder if he contradicts the "wisdom" of McHillary).

      "Well, yeah, the Constitution is worth it if you can succeed." -Nancy Pelosi, 6/29/07.

      by nailbender on Sun Apr 27, 2008 at 10:31:21 PM PDT

      [ Parent ]

    •  Gas Tax a Loser for Dems (0+ / 0-)

      So, we have gas approximating US$ 4 a gallon, with many working and middle-class families living paycheck to paycheck, and we refuse to enact tax relief???!!!

      This is a no-brainer.

      The gas tax is REGRESSIVE.  The WSJ editorial board supports the gas tax because it negatively impacts lower and middle-class Americans moreso than affluent ones.

      As to what the public supports....

      http://www.rasmussenreports.com/...

      60% Favor Suspending Gas Tax

      Tuesday, April 15, 2008

      On Tuesday, John McCain unveiled a proposal laying out an agenda to change the tax code and temporarily suspend federal gas taxes this summer.

      A Rasmussen Reports survey taken in mid-March found solid support for the gas tax suspension--60% of the nation’s adults believe the federal tax on gasoline should be suspended until prices come under control. Only 24% opposed the proposal.

      Support for suspending the gas tax is especially strong among lower-income Americans—among those who earn less than $40,000 per year, 70% favor the concept. Among those earning more than $75,000 a year, support dips to 49%.

      Learn about Centrist Economics, learn about Robert Rubin's Hamilton Project. http://www1.hamiltonproject.org/es/hamilton/hamilton_hp.htm

      by PatriciaVa on Mon Apr 28, 2008 at 05:49:12 AM PDT

      [ Parent ]

      •  60% want more potholes? (2+ / 0-)
        Recommended by:
        Joe Bob, VA Breeze

        The gas tax is REGRESSIVE.  The WSJ editorial board supports the gas tax because it negatively impacts lower and middle-class Americans moreso than affluent ones.

        The gas tax is a user fee. There are some things the government does which should be paid for directly. Would you say that it's regressive that everyone pays the same for their passports? Copies of their birth certificates? Postage Stamps??!

        There are some activities which the government can legitimately discourage with its tax policy. It may seem insane to say the gas tax is a sin tax; but if Jimmy Carter had sold the country on his 50 cents per gallon zero sum fee as "paying others to do your conserving for you," transit usage would be up and we wouldn't be in the mess we're in now.

        A clock that doesn't work is right twice a day. The endorsement of the WSJ doesn't automatically discredit any ideas.

        60% of the nation’s adults believe the federal tax on gasoline should be suspended until prices come under control. Only 24% opposed the proposal.

        Is democracy an indulgence or a responsibility? Suspending the gas tax "until prices come under control" will postpone the day when they do come under control.

        A more accurate moniker might be... the Loch Ness Social Anxiety Creature. -Satchel, Get Fuzzy.

        by Judge Moonbox on Mon Apr 28, 2008 at 07:03:07 AM PDT

        [ Parent ]

      •  And where is your degree in economics from? (1+ / 0-)
        Recommended by:
        johnny rotten

        Sorry - rather than repeal the gas tax, why not just give people a tax subsidy on their income tax for commuting to work?

        There are MUCH better ways to do this.

        Plus, the profits go to the oil companies, not the individuals.

        Just because the people that are for the tax reduction are knee jerk stupid idiots, doesn't mean we should frame policy around them.

        -6.5, -7.59. John McSame - running for Bush's third term. We can't afford it.

        by DrWolfy on Mon Apr 28, 2008 at 09:14:28 AM PDT

        [ Parent ]

        •  BA from Stanford, MBA from Harvard (0+ / 0-)

          I stand by what I said.

          Learn about Centrist Economics, learn about Robert Rubin's Hamilton Project. http://www1.hamiltonproject.org/es/hamilton/hamilton_hp.htm

          by PatriciaVa on Mon Apr 28, 2008 at 09:34:36 AM PDT

          [ Parent ]

          •  Did you study economics there? (0+ / 0-)

            A tax "holiday" is a horrible idea.  And yes, a gas tax (like all "sales taxes") is regressive.

            If you are concerned about disproportionate burden on low income, then give them a tax credit based on gasoline purchased or miles driven.

            Don't forget where the money from the gas taxes goes.

            What they teach as "economics" in a B-school (even Harvard, I taught MBAs at Chicago), is not a deep understanding of micro or macro economics.

            -6.5, -7.59. John McSame - running for Bush's third term. We can't afford it.

            by DrWolfy on Mon Apr 28, 2008 at 09:38:42 AM PDT

            [ Parent ]

    •  Clintons on the environment (2+ / 0-)
      Recommended by:
      Andy30tx, Shhs

      Bill Clinton has gone on the environment quite a bit lately.  But showed little interest in it while in office, even effectively muzzling Al Gore, who was strong on it.  (His Earth in the Balance was one of the best aspects of the 1992 campaign to my thinking.)

      A lot of the Clinton environmental record consisted of stuff done at the last minute:  3809 regs. on the 1872 Mining ACT (not bad in content), arsenic rule on drinking water.  Most of it was dumped the minute the Bushies walked in the door, so had little or no actual effect on the environment.  (Public outcry on arsenic forced them to keep that one.)

      At least since Reagan, Republicans are aggressive on pushing back on the environment from the minute they get into office.  Even on their transition teams!  Think about the Jack Abramoff/Stephen Griles connection.  They both ended up in jail (though Griles is probably out already), but their legacies still largely live on in policy.  (Griles midwived mountaintop removal in the Reagan years.)

      When Obama points out that there has not been any tightening of fuel efficiency rules in 30 years, he's criticizing Bill Clinton.  He doesn't say it explicitly, but Big Bill definitely hears it, and perhaps thinks of it as "negative campaigning".  For that matter, any time Obama talks about anything that needs changing with a time window that goes back more than 8 years, it's a major dog whistle for the Clintons.

      "You can't depend on your judgment when your imagination is out of focus."
      . . . . . . . . . Mark Twain

      by Land of Enchantment on Mon Apr 28, 2008 at 06:05:47 AM PDT

      [ Parent ]

    •  How about instituting a tax (1+ / 0-)
      Recommended by:
      Slartibartfast

      that increases as the drops below a certain amount? (Assuming that it ever will.) For every dollar that prices drop below, say, $105/barrel, we add a $.75 tax for use in alternative fuel development.

      I've always said that the day after 9/11, a $1.50 (at least) gas tax should have been instituted. People wouldn't have batted an eye to support it. What were prices then? $1/gallon? Another opportunity missed.

      •  Maybe not a day (1+ / 0-)
        Recommended by:
        strengthANDwisdom

        but a few weeks later.  The days after, people were really concerned about gouging and more attacks, and such.  One station on my way to my old job tried to charge $5 for about a day.  I refused to stop there until it changed hands about a year later.

        After a few weeks, it was clear that there wasn't going to be a real shortage.  The immediate fears and shock had subsided enough to make the real case for it.  Lay out how the money works its way from your pockets to weak governments anxious to pay off troublemakers, who then make trouble for us.  It's too bad we had the worst possible person in charge at that point.  

        (-7.25, -5.85) "Talk amongst yourselves. The Christian Right: neither Christian nor right. Discuss." --Linda Richman

        by Slartibartfast on Mon Apr 28, 2008 at 09:32:32 AM PDT

        [ Parent ]

    •  Bribing voters in an election year (3+ / 0-)
      Recommended by:
      johnny rotten, DrWolfy, tedshubris

      That's all this is.  Bad policy.

      We're pro-choice on everything! - Libertarian slogan

      by CA Libertarian on Mon Apr 28, 2008 at 08:32:31 AM PDT

      [ Parent ]

  •  So irresponsible (23+ / 0-)

    But is this what we have been reduced too? Voting for the politician who offers the biggest "holiday" or "rebate" even as we shrug the cost on to our kids? So far I have not seen many people getting excited about this. The savings for the average family will be $30 for the whole "holiday" --it's not worth it.

  •  Nice post. (13+ / 0-)

    Of course, the impact on the nation's highways from the funding that a gas tax holiday would take away doesn't matter to Hillary. You see, Eisenhower started the Interstate Highway System and he was a Republican president and we know they don't have good ideas, so who how could she support it? Geeze.

    No but seriously, good diary. I have talked to quit a few people about this gas tax idea.

    Make yourself necessary to somebody. Do not make life hard to any. Emerson

    by ElizabethAM on Sun Apr 27, 2008 at 09:41:47 PM PDT

  •  Wow this is crazy talk (7+ / 0-)
    It is a myth that Hillary is better on policy than Obama.

    Her whole policy is bashing oil companies. This isn't good for the economy or are long-term energy crisis. Hillary Clinton is short sighted.

  •  Actually Krugman came out with an editorial today (30+ / 0-)

    in which he again critizied McCain for the gas tax holiday as being nothing more than "pandering," but, of course, never mentioned that his favored candidate, Clinton, has engaged in the same type of pandering with the whole gas "holiday" idea:

    The impression that Mr. McCain’s tax talk is all about pandering is reinforced by his proposal for a summer gas tax holiday — a measure that would, in fact, do little to help consumers, although it would boost oil industry profits

  •  I've tried to resist the conclusion (23+ / 0-)

    That Krugman is now shilling for Hillary.

    But it is becoming more and more difficult to resist that conclusion, as the evidence starts to pile up.

    I'm not part of a redneck agenda - Green Day
    Neither is California High Speed Rail

    by eugene on Sun Apr 27, 2008 at 09:44:31 PM PDT

  •  I agree with you here, (11+ / 0-)

    I would like to see the gas tax increased and the money spent on high speed rail.  We have no real alternative to air passenger transportation in this country and with the high cost of fuel this is already becoming a real problem.

    Also, it seems that Americans always vote for less taxes so I am not convinced that Obama won't jump on this gas tax cut train also.

    •  Well, Obama called McCain's proposal a gimmick (8+ / 0-)

      Good background here:

      http://www.politifact.com/...

      For the record, Obama voted in the affirmative on a nominally similar proposal that passed in Illinois in 2000 by a 50-0-6 margin.  The article I linked to does a good job of explaining why that is not necessarily salient to this discussion.  I would also point out that the Illinois gas tax is assessed as on a percentage basis, rather than on a fixed, flat, per-gallon basis as the federal tax is.  Thus -- the state was making more money from this tax than it was expecting to when gas prices spiked in Illinois in 2000, and so there were no programs being offset as there would be with the federal moratorium.

      fivethirtyeight.com: electoral projections done right.

      by poblano on Sun Apr 27, 2008 at 09:56:38 PM PDT

      [ Parent ]

  •  Tipped. Rec'd. Nice work. n/t (4+ / 0-)
    Recommended by:
    peraspera, plum, tecampbell, poblano

    Son, you're makin' the same mistake with Iraq that I did with your mother. I didn't pull out in time.

    by fou on Sun Apr 27, 2008 at 09:49:59 PM PDT

  •  Paul Krugman, Guilty of Clinton-Bias. (8+ / 0-)

    The fact that only John McCain is a center of his criticism is absolutely ridiculous.  Hillary Clinton has proposed the same exact thing.  Paul Krugman leaves her alone entirely.  If it were Obama proposing the same thing as John McCain, you can believe Paul Krugman would be calling him on it.

    Not for Clinton, though!  E-mail Paul Krugman.

    "Behold, I send you forth as sheep in the midst of wolves: be ye therefore wise as serpents, and harmless as doves." Matthew 10:16

    by Setrak on Sun Apr 27, 2008 at 09:51:27 PM PDT

  •  You're one of them dangerous Obama cultists (32+ / 0-)

    arentcha?

    Krugman on Obama's health care plan, June 2007:

    "The Obama plan is smart and serious, put together by people who know what they're doing...So there's a lot to commend the Obama plan."

    "It also passes one basic test of courage. You can't be serious about health care without proposing an injection of federal funds to help lower-income families pay for insurance, and that means advocating some kind of tax increase. Well, Mr. Obama is now on record calling for a partial rollback of the Bush tax cuts. Also, in the Obama plan, insurance companies won't be allowed to deny people coverage or charge them higher premiums based on their medical history. Again, points for toughness. Best of all, the Obama plan contains the same feature that makes the Edwards plan superior to, say, the Schwarzenegger proposal in California: it lets people choose between private plans and buying into a Medicare-type plan offered by the government."

    But in November 2007:

    "The fundamental weakness of the Obama plan was apparent from the beginning."

    "What seems to have happened is that Mr. Obama's caution, his reluctance to stake out a clearly partisan position, led him to propose a relatively weak, incomplete health care plan."

    It pisses me off that someone with this much influence decides he has a vendetta against a guy and throws away his integrity to pursue the venting of his spleen.  It was when Obama called him on his bullshit that he went blind toad-wild, lashing out about dangerous cults.  Eff that guy.

    Calloused hand by calloused hand.

    by PocketNines on Sun Apr 27, 2008 at 09:58:42 PM PDT

  •  Disappointed in Krugman... (3+ / 0-)
    Recommended by:
    tecampbell, Hens Teeth, poblano

    I have had great respect for him for a long time.  But since he has pointed out Obama's economic mistakess--no mandate on Health Care, and saying no tax increases for other than the top 1%, he had an obligation to point out this this proposal is endorsed by Clinton.

    Did Obama make the same points that we are making here. Has he rejected the idea of a gas tax holiday.

    And I've yet to hear about him condemn the tax givaway to the home builders, the people who brought us the bubble, in the so called "bailout" bill being worked on now.

    I would love it if Obama got more guts to be an economic rationalist.  If so, he may have the field for him self for the nomination and the general election.  

    •  I wonder if they're almost baiting Obama (1+ / 0-)
      Recommended by:
      tecampbell

      To make an issue of this, and then they'd counter by showing how "out of touch" it made him.

      fivethirtyeight.com: electoral projections done right.

      by poblano on Sun Apr 27, 2008 at 10:02:28 PM PDT

      [ Parent ]

      •  McCain had taken a firm stand... (0+ / 0-)

        that there would be no government bailouts of those whose houses lost value.  In this case he was right, and it is position of about three quarters of Dkos members.

        Then he did a 180, proposed a massive bailout, and did not get a word of criticism that I saw, other than my diary, which you can reach by hitting  my user name at the bottom a few diaries down.

        The tendency to pander is powerful, for those of both parties.  I find it depressing, but what can we do.

    •  Hillary's foreclosure moratorium (5+ / 0-)

      and interest rate freeze are the worst sort of pandering imaginable, and Obama did not jump on-board.

      I'm not surprised Krugman has not brought up how laughable Clinton's proposals are to, well, every economist who I've seen discuss them.

      And there's a very clear distinction here.  Clinton claims everyone can keep their house.  Obama wants to help people who can afford to keep their house do so, and those who can't move into a home they can afford.

      WARNING: There is a high probability that the preceding comment is snark. Use your best judgment (hopefully better than Sen. Clinton's or Sen. McCain's).

      by Anarchofascist on Sun Apr 27, 2008 at 10:14:56 PM PDT

      [ Parent ]

  •  Krugman has the integrity of a Clinton blogger (10+ / 0-)

    The Old Gray Lady and most of her employees passed into irrelevance this election cycle when people like Krugman, week after week, are walking the well-trod path of partisan bloggers.

    Most of Krugman's recent articles have said more about him as an editorial writer than anything about McCain or Obama. The liberal columnists of all the major papers lining up along partisan lines are pretty hilarious, but Krugman has fallen the farthest and the hardest.

  •  Thanks, folks (14+ / 0-)

    There are some diaries that you really hope will make the rec list and this was one of them -- sincerely appreciated.

    fivethirtyeight.com: electoral projections done right.

    by poblano on Sun Apr 27, 2008 at 10:04:15 PM PDT

    •  Some diarists you really hope make the rec list (0+ / 0-)

      And you are at the top of that list for me.  Although I always read your diaries in full before hitting the Recommend button, it's now more of a formality because every diary you write is so substantial.  Thanks!

      Oh, and great work at fivethirtyeight.com, too.  I now check it every day!

  •  Ah well see (3+ / 0-)
    Recommended by:
    itsbenj, tecampbell, poblano

    what Yglesias had to say a while back.. I'm too lazy to link it, but the gist of it was, Clinton said, "I'd favor the gas tax holidy if we could make it up from the Highway Trust Fund".

    It's a fancy way of saying, "the gas tax will not happen", but it isn't as bold as Obama's "F**k you" to McCain.

    The President thinks sodomizing children is cool. Bitter? No, that was me when Bush stole the 2000 election.Right now, I'm f--kin' pissed.

    by bhagamu on Sun Apr 27, 2008 at 10:08:42 PM PDT

    •  It still impairs her credibility going forward (3+ / 0-)
      Recommended by:
      lauramp, omegajew, bhagamu

      I agree that if you take the policy implications literally, this issue is somewhat moot.  Clinton will not be President this summer, and at most would have 1 vote out of 100 in the Senate (and FWIW, I'd expect that the gas tax moratorium, popular though it might be, would be the subject of one or more "holds" in the Senate because of the sensitivity of screwing with federal highway funds, and therefore would never see the light of day).

      However, the longer-term issue is that we badly need a gas tax increase, and Clinton could no longer put forth such a policy for the entirety of her term(s) without risking being branded as a flip-flopper.

      fivethirtyeight.com: electoral projections done right.

      by poblano on Sun Apr 27, 2008 at 10:26:55 PM PDT

      [ Parent ]

  •  Pandering at its worst... (1+ / 0-)
    Recommended by:
    lauramp

    ...without doing anything serious about our nation's long-term dependency on foreign oil. That's a long story told short statement about Hillary Clinton's flawed and dishonest proposal to lower the gasoline tax (a slight drop in the bucket in the scheme of how much we pay for gasoline). Her plan and a similar one by John McCain do nothing to cut gas prices but puts a huge strain on a fund that supports highways, bridges, and the like. Where will Hillary and McCain be if, for example, the I-30 bridge near downtown Dallas collapses like the one in Minneapolis did some time back? Where will the funds to rebuild the bridge come from after Hillary and McCain take the funds away in the name of doing some election year pandering?

  •  Paul Krugman needs to come out and (4+ / 0-)
    Recommended by:
    johnny rotten, tecampbell, seabrook, soms

    criticize Hillary's pandering on this issue or he is proven as nothing more than a hack, regardless of his credentials as an economist.  His reputation is on the line here.

    WARNING: There is a high probability that the preceding comment is snark. Use your best judgment (hopefully better than Sen. Clinton's or Sen. McCain's).

    by Anarchofascist on Sun Apr 27, 2008 at 10:10:48 PM PDT

  •  I don't want my grandkids paying for my gas. (10+ / 0-)

    I'll pay my taxes now, thank you.  My grandkids will have enough to worry about (if I have them).

    We have become what they fear.

    by tecampbell on Sun Apr 27, 2008 at 10:12:41 PM PDT

  •  Europe has done so well (11+ / 0-)

    Investing their high gas tax revenues in alternative transportation and cleaner energy sources.  It's wonderful to see the high percentage of small cars on the roads in France.  

    The planet would be sooooooo far ahead if the U.S. had similar policy.  

    I'm looking forward to November 5th, 2008

    by susanWAstate on Sun Apr 27, 2008 at 10:15:04 PM PDT

  •  I wonder why either Hillary or McCain... (0+ / 0-)

    ...have come out in favor of opening up our strategic oil reserves to try to at least provide some alleviation from high gas prices for consumers instead of resorting to this demogogic proposal for "gas tax relief" without even thinking about the long-term effects of the proposal. Also, I wonder why McCain and Clinton are not talking about our need to find alternative energy sources in the future so we will never be dependent on unreliable foreign petroleum resources in pushing this unwise and flawed proposal for "gas tax relief."

    •  Even a release fron the reserves would do little (0+ / 0-)

      to affect gas prices.  Much of the pricing problem in this country is due to bottlenecks in refining capacity (oil has to be refined into gasoline).  Without any effort at opening up these bottlenecks, arguments about crude oil will not ultimately do much to move prices.  The only positive thing to come from high oil/gas prices is that it has provided more incentatives for and more profitability in renewable energy.

  •  Is Krugman on the take? (3+ / 0-)
    Recommended by:
    Ashy Larry, CarolynC967, lauramp

    As Poblano said:

    This issue is right in Krugman's wheelhouse: it's bad economics, bad policy, and bad politics

    I feel like I'm watching a boxer refuse to throw a punch because he's been paid to throw the fight.

    What are you doing for Earth Day?

    by Blue Orb on Sun Apr 27, 2008 at 10:32:26 PM PDT

    •  Thats quite an accusation (2+ / 0-)
      Recommended by:
      phenry, Blue Orb

      and its one the diarist didn't even come close to making.

      Not sure how much you know of him, but Krugman deserves a bit more respect than being accused without out substantiation of being on the take.

      •  You're right (0+ / 0-)

        I don't know much about Krugman (other than reading his columns).  It's an unkind and unfair accusation.  Honestly, I wasn't speculating as much as expressing my bewilderment at his lack of comment on Clinton's support for the gas tax "holiday".  

        What are you doing for Earth Day?

        by Blue Orb on Mon Apr 28, 2008 at 11:55:28 AM PDT

        [ Parent ]

  •  It's Not Just About "Gasoline" (0+ / 0-)

    The Federal excise tax on diesel is (I think) .244/gallon, which on the average tractor/trailer comes to about 5 cents per mile.

    There are about 500,000 owner/operators in this Country, with one to three trucks, and thousands of small "mom and pop" companies with a couple dozen trucks, all of whom are on the ragged edge of shutting down because of rising fuel prices. Many already have.

    Lower prices would not "encourage" more driving, just as higher prices won't "discourage" it, the same freight will be moved either way. The difference is in who moves it. As small operators sink the big companies take up the freight, increasing their market share and grip on the industry.

    If Obama wants to drastically improve his chances with a few million "blue collar" workers and shut Clinton and McCain up in one fell swoop he should reject the "gasoline tax" suspension and call for one on diesel only.

    We have no intention of prosecuting Rush Limbaugh because lying through your teeth and being stupid isn't a crime.

    by The Baculum King on Sun Apr 27, 2008 at 10:35:56 PM PDT

    •  It good politics (0+ / 0-)
      but really bad policy. Which can be found in study after study
      •  Is It Good Policy to Have 6 Trucking Companies? (0+ / 0-)

        Do we really want all truck freight concentrated in a handful of huge companies like J.B. Hunt, and thousands of small businesses put out of business? Do those studies address the long-term efeects of that minor detail?

        We have no intention of prosecuting Rush Limbaugh because lying through your teeth and being stupid isn't a crime.

        by The Baculum King on Sun Apr 27, 2008 at 11:14:05 PM PDT

        [ Parent ]

  •  KRUGMAN & POBLANO (0+ / 0-)

    Accusing Krugman of dishonesty? Why , I would accuse Pob  either of reading miscomprehension or willful misrepresentation. I just read Krugman . He criticises the Democrats, I assume Hillary , of being in error about some tax policy without being specific, in passing. The article in the NYT deals with McCains attempt to do one better than Bush in general tax policy . He accuses both of trying to hide facts  from the public by a sleigh of hands with McCain's proposal being even worse than Bush. How this passing unspecific remark can be twisted into an act of hypocricy by Krugman or a 2000 word essay on the folly of Hillary's tax policies requires the genius of a Poblano.

    •  Did you read the diary? (0+ / 0-)

      The diary was initial posted before the Krugman article was published.  Poblano's point was that Clinton just made a terrible policy proposal (gas tax holiday) that makes no sense from an economic perspective.  Poblano pointed out that Krugman has been bashing Obama on these types of issues, and wondered whether he would do the same to his favorite candidate.  Krugman did criticize Clinton, though given the thrust of the article this is defensible, though I wonder if Obama had made this proposal instead whether Krugman would have added a short quip about it.

  •  Truth about gas tax holiday (3+ / 0-)
    Recommended by:
    Mr Bula, dirtdawg, paintitblue
    1. IL tried a gas tax holiday and it was found out that the savings wasn't passed on to the cutomer.

    2. Gas tax holiday will only save car drivers about 25 dollars per car.

    3. It takes money from the Highway fund.

    4. It puts money in the pockets of oil companies, gas station owners, and a whole bunch of other people we don't agree with.

  •  The update about the new Krug editorial (7+ / 0-)
    Recommended by:
    Joe Bob, ORDem, phenry, Mr Bula, I, okamichan13, omegajew

    is a bit misleading.

    Quoting this:

    If truth be told, the McCain tax plan doesn’t seem to embody any coherent policy agenda. Instead, it looks like a giant exercise in pandering — an attempt to mollify the G.O.P.’s right wing, and never mind if it makes any sense.

    The impression that Mr. McCain’s tax talk is all about pandering is reinforced by his proposal for a summer gas tax holiday — a measure that would, in fact, do little to help consumers, although it would boost oil industry profits.

    More and more, Mr. McCain sounds like a man who will say anything to become president.

    This makes it seem as though Krug is criticizing McCain's gas tax idea all the way through.  He isn't.  Krug is criticizing a bunch of other McCain tax ideas, and throws in the point about the gas tax as afterthought, at the very end of the editiorial.  The word "gas" appears once in the editorial, as quoted, at the end.

    The idea that Krug should have added "oh and Clinton too" there, at the end of an editorial about McCain's non-gas tax ideas, is a bit much.

    •  yeah but (3+ / 0-)
      Recommended by:
      CarolynC967, lauramp, LithiumCola

      based on his 2000 criticism, and his present implied criticism, shouldn't he go after HRC, as a matter of intellectual honesty?

      •  Well, maybe. (4+ / 0-)
        Recommended by:
        ORDem, phenry, Mr Bula, okamichan13

        We're arguing over whether Krug should have included a parenthetical remark about Clinton at the end of an op-ed about McCain.  Maybe you're right.  I think it's a bit hair-splitting to insist on it, though.

      •  Krugman writes on all sorts of issues (0+ / 0-)

        and his views on this issue are very clear from his past writings. I don't really see how he is somehow required to write on this specific issue with regards to Clinton at this specific time. Given that his views are already well-known, really not getting the whole intelectual dishonesty thing.

        With so much going wrong with the current administration, limited space, and unlimited range of topics, its seems like a strawman really. And something that could be handled better by asking Krugman in an email or letter to cover it, rather than accuse him of intellectual dishonesty.

        Maybe the diarist can point out which of Krugman's recent articles should not have been written?

    •  Right. Krugman is doing what we all hope (0+ / 0-)

      more progressives would be doing: going on offense against McCain.  The fact that he may be shilling for Clinton is almost beside the point.  I know I would be very happy if Krugman just stopped writing about the Democratic race altogether, and started writing solely about McCain.  It's about time somebody started doing that.

    •  Agreed - Krugman is clearly focusing his fire (1+ / 0-)
      Recommended by:
      phenry

      on McCain's inadequate plethora of tax policies and proposals. That would seem to be good thing and not something to criticize.

      The diarist seems to be force-fitting Krugman's editorial on McCain to fit his own thesis on Clinton who clearly has a different overall tax policy than McCain.

      •  Selective focus is not bias (0+ / 0-)

        Sure, Krugman's article is more about McCain's tax policies in general.  But that doesn't mean that the diarist is wrong to point out the inconsistency in Krugman's failure to mention that Clinton follows McCain's wrongheaded policy regarding the gas tax.  

        I would, however, note that it is possible that Krugman just doesn't KNOW that Clinton has started talking about a gas tax holiday in the same way McCain has.  It isn't exactly headlining news.

  •  The Art of Political Understatement (3+ / 0-)
    Recommended by:
    Inland, poblano, paintitblue

    For the record, I also think she's in the right headspace on the issue of health care mandates, although if you get into the economic nitty-gritty, I think there are decent arguments that implementing mandates without overhauling privatized medical insurance might not have the desired effects in terms of passing savings along to consumers.

    No kidding, poblano!

    IMO, there's simply no solving our healthcare problems without overhauling--or better still eliminating--private medical insurance.

    Both Clinton and Obama's plans are, at best, just rearranging the deck chairs on the Titanic. And they may not even have the political capital to do that.

    This nicely summarizes what's wrong with American political life today. (Source)

    by GreenSooner on Sun Apr 27, 2008 at 10:48:14 PM PDT

    •  EXACTLY! That's why I don't get (4+ / 0-)

      twisted over the two plans --- they both suck, and neither one will be passed.  There has to be an entire overhaul of the system which relieves businesses of paying for healthcare and shifting it to the government, which means --- the American taxpayer.  It's the only way to achieve an efficient and affordable system.

      But there are baby (toddler) steps that we can take which will lull the population into "socialized" medicine and those have to happen NOW.

  •  I'm sorry but Krugman is full of sh*t (0+ / 0-)

    about 95% of the time in my opinion. He has little credibility with me. I see a lot of traits in him that I see in the right wing talking heads... they will say anything (whether they believe it or not) if they think it will make them a few bucks.

  •  Here's the deal with Obama...he can, (5+ / 0-)

    and should say: "I voted for something like this in the past, and I was proven WRONG. That's why I know it's a bad idea now."

  •  Great instinct and i just read Krugman piece (4+ / 0-)
    Recommended by:
    CarolynC967, lauramp, poblano, Hope Monger

    and I have to agree with you, he's not interested in professional honesty anymore. Although his piece hit the bull-eyes on the danger of such policy, he ignored Mrs. Clinton who has proposed the same thing and is running an ad in Indiana to score points on it. So what's the matter with Mr.Krugman?

    ARG is a team of blindfolded monkeys on crack throwing feces at a number chart.Looks like the monkeys hit Clinton's numbers today. MB

    by Jr1886 on Sun Apr 27, 2008 at 11:00:20 PM PDT

  •  Hillary just as bad as McCain (1+ / 0-)
    Recommended by:
    lauramp

    More and more we see that Hillary would be just as bad as McCain.

    On Iran, she is to his right and dreams of nuclear war.  She would never take troops out of Iraq, because she needs Iraq as a staging base to attack Iran.

    On economics, she and Bill have sold out so much to big moneyed interests that regardless of what she says, she would just give corporate handouts and screw the little person.  

    On the environment, forget it...Hillary does not care.  On energy independence, forget it...Hillary and Bill have taken way too much money from the oil barons in the Middle East.

    It's actually worse with Hillary doing these things, for it legitimizes them moreso than when Republicans do them.  It really means that they become a settled assumption...that both parties are in agreement.

    That's what Hillary would do: follow a far right policy, and then make it the de facto assumption of American politics.  In many ways, Hillary may be the worst nightmare as president.  Hopefully she will never get that chance.

  •  Bread and circus. (0+ / 0-)

    When has a public figure slid so far as Hillary Clinton.  It seems that now she realizes she will not win with the progressive base, so she's trying to take votes away from McCain in the GE.  How she imagines beating Obama first, one can only wonder.

    As to your references to being in favor of high gas prices:  hear! hear!  I make myself unpopular with my friends when I criticize them for their complaining and blaming about high gas prices.  Fossil fuels are severely underpriced.  Naturally, I support this in the context of also wanting an over-all social/political/economic policy which solves the transportation problems of those who can't afford gas.

    Just another piece of toast in the Pebbles commercial.

    by geomoo on Sun Apr 27, 2008 at 11:38:34 PM PDT

  •  Our Businesses Suffer Under th Greed of the Peopl (0+ / 0-)

    Eliminate all business taxes or we shall collapse. Transfer all taxes to the homeless who after all are shiftless and traitors.

    I got nothing. It's impossible to parody the United States of America.

    We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

    by Gooserock on Mon Apr 28, 2008 at 12:11:48 AM PDT

  •  Krugman disappoints (2+ / 0-)
    Recommended by:
    CarolynC967, Hope Monger

    He doesn't mention Clinton, fine.  But he also doesn't mention that Obama has opposed the gas tax "holiday" even though he's received a fair amount of flak for it.  I can understand the partisanship, but let's also have some semblance of balance.

  •  Nice post--here's a supply and demand graph (0+ / 0-)

    I wrote this up much more briefly and drew the relevant graph at our post at Economists for Obama

  •  The gas tax is extremely regressive. (0+ / 0-)

    And until we have alternative forms of transportation that are readily available to all, it is extremely unfair to be talking about a hike in gas taxes, which would hit the poor the hardest.  They already have a rough enough go of it.  I understand that we have to reduce CO2 emissions, and that we should work to reduce our consumption of foreign oil, but why should the poor bear the brunt of the economic costs of our efforts to do so.  I think a much better solution is an overall carbon tax on industry, raising CAFE standards in new automobiles, and working like crazy (just like worked like crazy to get to the moon & to build the atom bomb) to make alternative fuel sources viable.

    With that said, I don't think that a 3 month "moratorium" on the gas tax is really going to help much in the long term, and I think McCain is using this for political purposes.

    •  "Sin taxes" are regressive too . . . but . . . (2+ / 0-)
      Recommended by:
      paintitblue, Sedi

      they also serve an important public health function. It's well-documented, for example, that the single biggest factor in reducing teenage smoking has been cigarette taxes that raise the price of a pack above what an adolescent allowance can bear. We need to start thinking of the gas tax as a global warming–era sin tax.

      That being said, the lack of transportation choice in our suburbs and small towns is going to kill those of us who have no recourse but to keep consuming gasoline. So while the gas tax needs to be raised substantially -- and I'm not moderate about this, I think gas ought to be up around $10 a gallon -- we also need to preemptively begin studying ways of providing feasible alternative transportation to Americans who live in car-centric communities. Minibuses, summoned electronically from fixed pickup and dropoff points, are one possibility.

      "The great lie of democracy, its essential paradox, is that democracy is first to be sacrificed when its security is at risk." --Ian McDonald

      by Geenius at Wrok on Mon Apr 28, 2008 at 05:17:44 AM PDT

      [ Parent ]

    •  ((shrug)) (0+ / 0-)

      A) put the tax on all oil, or all imported oil, and that way it's less regressive.

      B) remember that Kerry's spitballing of a 50 cent a gallon tax was so outrageous because at the time he did so, it would have raised the price of gas maybe even as high as $2.25/gal.

      Hillary says, let's give her campaign another Friedman.

      by Inland on Mon Apr 28, 2008 at 05:48:13 AM PDT

      [ Parent ]

    •  address this through progressive income tax shift (1+ / 0-)
      Recommended by:
      Joe Bob

      A higher gas tax can be counterbalanced with lowering or eliminating the bottom tax bracket in the income tax structure.  If you make it revenue-neutral there's no reason that the poor need to bear a disproportionate cost.

      A carbon tax on industry has the same effect as a gas tax, it's just abstracted out (I support both).  CAFE standards are nice and all but they don't change usage patterns, which are a big part of the problem.

  •  One of the saddest things in this primary season (3+ / 0-)
    Recommended by:
    Cowalker, Inland, max stirner

    for me, is my loss of "faith" in Krugman.  In the past, I've read his columns avidly.  I've turned to him for information on issues, particularly economic issues, which I have little to no independent knowledge of, not being an economist by trade.

    But when he started writing about the Obama campaign, of which I do have some independent knowledge, having studied it rather carefully, I started noticing a certain distortion of fact, a one-sidedness that frankly horrified me.

    It's caused me to doubt all his past columns...was I really just missing the one-sidedness because I agreed with it?

    A disheartening thought.

  •  Great diary, poblano. But one additional (1+ / 0-)
    Recommended by:
    Joe Bob

    point about how bad this idea is  -- the federal gas tax goes directly into the Interstate Highway Trust Fund.  If does not go into general revenues.  Any moratorium would take money away from badly needed infrastructual improvements -- improvements which are needed not only as our infrastructure is crumbling, but which are particularly important as we strive to pull the economy out of recession.  Good paying, union construction jobs can do an awful lot to raise us out of this recession.  More than the tax rebates we'll be getting this month.

    Diplomacy, n. The patriotic act of lying for one's country -- Ambrose Bierce - So how come the Bushies are so bad at diplomacy?

    by Its the Supreme Court Stupid on Mon Apr 28, 2008 at 05:43:37 AM PDT

  •  Krugman strikes back (0+ / 0-)

    To be honest, it is by no means clear that Clinton should criticised on the grounds of faulty energy policy.  I tried to pin down what she said, and this is what I have found:

    "I think we should look seriously at having a gas tax holiday as long as we can make up the lost revenues for the highway trust fund," she said. "I think we can do that if we put a temporary windfall profits tax on the oil companies. We could actually take the cost off the drivers."

    So cut the tax on gasoline, make it up with a tax on gasoline producers, and leave it to them the pass it to the consumers.  

    Thinking about it, this is what we should do: abolish gas tax altogether, and slap 40 dollars per barrel tax on every barrel of crude that is produced or imported.  And rather than a regressive tax on poor drivers, we tax super-rich oil companies.

    Clever, perhaps too clever.

  •  Maybe I'm being dumb (0+ / 0-)

    but if reducing the gas tax would not result in a price decrease because the oil suppliers would likely make up the difference, doesn't that complicate the argument that raising the gas tax would discourage fuel consumption?  That is, wouldn't the price still have a tendency to remain flat, and a higher gas tax simply eat into oil company profits (also not a bad thing, of course)?

    It seems like either both should be true or neither should be true, but if I'm misunderstanding somebody should explain.

    I agree that eliminating the gas tax is a bad idea, and your diary is very convincing on that point.  I have to say, though, that Sen. Clinton's ad is rather brilliant.  "With gas this expensive, talk is cheap."  She just had to get that dig in there...

    •  I think it's not the oil companies who manipulate (0+ / 0-)

      the price to maintain maximum profits, in the main it's  simply supply and demand.

      If you scrap the gas tax then demand will simply increase to the point where the price is the same, increase the gas tax and demand will decrease to the point where the price is the same. Obviously there are other factors and recent gas price hikes have done little to reduce demand. This will change when the down turn/recession/depression hits.

      I am here because of Astley

      by Grass on Mon Apr 28, 2008 at 06:33:31 AM PDT

      [ Parent ]

    •  To paraphrase Keynes (3+ / 0-)

      Prices are "sticky downwards".  Which is to say, that prices can increase quickly, but do not tend to decrease except at the rate that inflation levels them out.  So, if gas taxes go up, prices go up.  If gas taxes go down, prices don't go down, or not as much, in the short term.

  •  Krugman =Hillary Clinton(NeoCon-NY) shill (1+ / 0-)
    Recommended by:
    CarolynC967

    Krugman has lost it.......he has so much hatred for Obama he won't do any pieces on Clintons crap or ReTHUGlican policies.

    CondiLiar Rice, enabler and war criminal

    by gaiilonfong on Mon Apr 28, 2008 at 06:22:09 AM PDT

  •  Gas taxes should be going UP, not down. (2+ / 0-)
    Recommended by:
    OpherGopher, zackamac

    We need another $.50 per gallon, and/or a marked expansion of tolls and fees, that goes straight to highway maintenance and repair.  The highway system should be self-funding like the U.S. Postal service is, and appropriate gas taxes and tolls could easily make this happen.

    In addition, we need something on the order of $1.10 to $1.30 per gallon in gas taxes purely to reflect the cost to society of CO2 emissions.  This makes sense in the context of a $400/ton carbon tax.  If oil refineries are forced to buy carbon permits that cost $400/ton(C), that has the same effect.

    So, in total, that's something like $1.60 MORE per gallon in gas prices.  Even then, we'd be below many other nations in real cost of gasoline.  But if we're serious about climate change or energy independence, that's the way we need to go.

    I've managed to avoid hating Hillary Clinton or her campaign through this whole process, but I am deeply disappointed in her for advancing what she must know is a terrible economic policy, purely to score political points.

  •  You, too, should go after McCain... (0+ / 0-)

    He is the enemy we'll face in the fall.

  •  Rent control (0+ / 0-)

    Teachers of economics cherish bad policies. For example, if New York ever ends rent control, we will lose a prime example of what happens when you try to defy the law of supply and demand. And so we should always be thankful when an important politician makes a really bad policy proposal.

    This really makes me wish I could read more about the consequences of rent control.

  •  If Krugman wrote about the last Super Bowl (0+ / 0-)

    Agreed that Krugman has become a shameless shill for Hill.  For more Krugman fun, see my diary post on his last week's editorial:

    http://www.dailykos.com/...

  •  If one ever (0+ / 0-)

    waits with the expectation that Paul Krugman will ever call out Hillary Clinton on anything will be waiting an awfully long time.
    From my reading of Krugman over the years he refuses to hold his candidates to the same standard he holds his opponents.
    This is just one more example of this.

  •  Poblano, your point on Clinton and environment (2+ / 0-)
    Recommended by:
    Joe Bob, zackamac

    is spot on.  In the fall, when she was the front-runner, she openly addressed a global warming forum and talked about the need for "incremental" change.  I almost fell out of my chair.

    Who would run for president on an issue like global warming and signal her willingness to compromise BEFORE negotiations even began on the issue?

    Absolute Horror: The Best in Bad Horror Movies

    by dansac on Mon Apr 28, 2008 at 07:43:45 AM PDT

  •  You nailed it - let the market work (0+ / 0-)

    Unless gasoline is allowed to become more expensive due to supply and demand changing, there will be no incentive to find replacements.

    Yep, there is no bigger fan of a gas tax holiday than the oil industry itself.  It's all just a distraction, another effort like the Bush tax rebates to bribe voters in an election year.

    We're pro-choice on everything! - Libertarian slogan

    by CA Libertarian on Mon Apr 28, 2008 at 08:31:53 AM PDT

    •  BS...markets are not as efficient and produce (0+ / 0-)

      significant external costs which markets won't correct. Fundamental flaw in Libertarian thought. Global warming is a great example of externalities and long-term costs that markets don't factor.

      •  you seem to be responding... (2+ / 0-)
        Recommended by:
        IndySteve, CA Libertarian

        Not to CA Libertarian's comments, but CA Libertarian's username.  My read of his comment is that he is in favor of raising the gas tax and letting market forces take care of the rest.

        I agree that climate change is a classic example of an externality.

        •  Raising the gas tax is not letting markets (0+ / 0-)

          work. It's an acknowledgement that markets are imperfect and even inefficient. Maybe CA Lib. agrees with this, maybe not. But most Libertarian thought is completely ignorant of this effect of markets.

      •  Agree re/externality issue (0+ / 0-)

        The existing market does not handle global warming very well.  What I would favor is a market-based carbon trading system which would benefit energy generating technologies which don't generate carbon while penalizing technologies which do - and then the government getting in the way as little as possible once such a system is in effect.

        Re/the gas tax, it is indeed foolhardy to apply Libertarian ideology in a vacuum.  My comment about letting the market work is really on the incremental question of removing the gas tax now.  Presently, the market is working, encouraging people to use less gas as the price of gas increases.  For the federal government to intervene now - even in a way I'd see as desirable down the road (eliminating the gas tax) - sends the wrong message.  That being said, as taxes go, the gas tax isn't that bad - especially if it goes back into road construction and maintenance, then it's more or less a usage fee and a relatively efficient way of collecting those fees versus, say, tolls.  It is entirely inadequate as a means of managing the global warming externality, and it certainly isn't being used that way now.

        We're pro-choice on everything! - Libertarian slogan

        by CA Libertarian on Mon Apr 28, 2008 at 02:23:30 PM PDT

        [ Parent ]

  •  Paul Krugman is a FAKE ARTIST ! (0+ / 0-)

    His outrage at Obama's economic plan was as fake as a Holywood movie.

  •  About 50% pass-through (1+ / 0-)
    Recommended by:
    zackamac

    The MIT study cited has it right: about 50% of a tax reduction will reach consumers, and the rest will be captured by producers.  That's because the elasticity of supply (over the timescale of months) is dominated by the ability to reroute tankers from foreign markets.  Thus the elasticity of supply is equal to (inverse) elasticity of demand of the rest-of-world, which is about equal to our own elasticity.

    If you cut the tax 20 cents, prices will rise 10 cents.  People will drive a bit more because it's cheaper, and we'll attract a bit more imports because we've raised our bids.

    Obama > Clinton >>> McCain

    by lilnev on Mon Apr 28, 2008 at 08:53:38 AM PDT

    •  My opinion is that the oil companies are seeking (1+ / 0-)
      Recommended by:
      zackamac

      the shape of the demand curve for gasoline and oil products (find the point where demand becomes elastic, i.e., a small increase in price causes a large drop in sales) with their pricing policy this year, and then they will use this knowledge to LIMIT supply to the point where the price will continuously hover about this price point.

      This will allow the monopolistic or oligopolistic control of price through the profit maximumization strategy that monopolists always use, and that is to produce until marginal cost equals marginal revenue, but the revenue is set by limiting supply to that level which maximizes profit, which as we are all taught in econ 101 is the goal of the rational producer.

      So, as Pablano and others have already pointed out, cutting the tax will only provide the oil companies cover to sell gasoline at a higher price while providing political eye wash to some candidates.

      And to a Republican, monopoly is not a problem because Milton Friedman said monopolies don't have much impact on the economy as a whole, therefore they see no need to prevent their appearance in our economy through M and A activity.  But that's another story.

  •  The oil companies always blame environmentalists (1+ / 0-)
    Recommended by:
    zackamac

    when the gas price surges each spring.  This has nothing to do with tax policy, but each year they use this as an excuse when switching to summer blends necessary to reduce air pollution.

    So there is generally a so-called supply shortage as the transition is taking place, driving the price of gas up to about 25 or 30 cents above the summer equilibrium price of gasoline.  This annual event then causes consumers to get the feeling that "it could be worse" while masking an annual 25 cent increase in the real cost to consumers of gasoline.

    Let me propose an alternative bottom line to this phenomenon.

    One of the "excuses" by the oil companies is that the tank farms need to drain and remove scale from the inside of the tanks because the summer blends are more corrosive.  This looks to me like a fairly simple resourse allocation problem, in that this task can be accomplished one tank at a time well in advance of the changeover, and the same could happen at the end of the summer driving season, which in a logical world would be when the excessive corrosion would happpen because of additional exposure to higher blends of ethanol.

    So, we have an oil company with a CEO making over $10 million per year, and at least one of them makes $80 M per year, and they have an executive function answering to him/her who are also the recipients of multi-million dollar incomes, and these folks cannot solve a resourse allocation issue that they KNOW will happen each and every year?  Gosh, maybe they just don't want to solve that problem, ya' think?

    In that instance, fixing that problem would save the American consumer more than cutting an 18 cen tax would.

    Why aren't the shareholders bringing this and other similar questions up at the annual shareholders meetings?  Why doesn't the Board of Directors hold the executives they hire accountable for this easily predictable and solvable issue?  If the industry has been switching to summer blends for over 30 years, why do they seem suprised that it happens each spring?  Someone should be asking these questions, particularly our news media, and they should be demanding answers that are not condecending platitudes.

    Does anyone who owns a small stake in the various oil companies want to put these questions to their executives at an annual meeting?  Should we push our mutual fund managers, who hold large blocks of oil company stock these questions?  We do have some power over these folks because we can vote with our dollars and put our IRA's with another fund manager.

  •  Having studied economics in grad school (1+ / 0-)
    Recommended by:
    Slartibartfast

    Spurring demand for gasoline is a bad idea.  The taxes need to go up to internalize the huge amount of externalities gasoline consumption create.

    The "real cost" of Gasoline, should approach $5/gallon or more in order to measure the true cost.

    Pander bear McSame wouldn't know this as "economics isn't his strong suit".  But HRC should, and it is a shameless pander.

    -6.5, -7.59. John McSame - running for Bush's third term. We can't afford it.

    by DrWolfy on Mon Apr 28, 2008 at 09:11:54 AM PDT

    •  I studied economics in grad school too (0+ / 0-)

      and the American (and other country's) consumers have demanded through their government's adoption of environmental laws (US EPA) that the producers and users of oil products take actions to limit the externalities created by thier use.

      California, which had the greatest problems in the 50's, 60's and 70's led the way, first by forcing the removal of tetraethyl lead from gasoline, forcing the cleaning up of refineries, and a continuing series of actions, (PCV valves), sealed fuel systems, even changes to the dispensing hoses, and limiting topping off tanks to prevent pushing vapors out the filling hole of the gas tank.  Also the industry was forced to produce summer blends, the auto industry was forced to use catalytic converters, CAFE standards and many other measures.)

      Consumers have to do their part by requirements to inspect and maintain the pollution controls built into their cars.  The cost of limiting these externalities are already built into the price we pay at the pump for gasoline.  Personally, that is a price I am willing to pay, because it results in cleaner air and water that I, my family and our nation breathe.  I have no problem having the cost for these externalities passed on to me.  Mr. Milton Friedman called externalities "neighborhood effects" and recognized that charges to recover fixing these were perfectly legitimate for the producer of the externalities to  charge for in the cost of the goods and services we buy.

      Consumers and producers of autos are further taking actions to both reduce demand for fuel and reduce the externalities of vehicle use by doing the long term consumer behavior of buying "greener" cars that are hybrids which use less fuel, which puts less pollution into our air as a result, and at the same time reduces long-term demand for fuel.  Again, consumers are voting with their dollars for both reduced fuel demand and a reduction in their personal fuel use related externalities, and they are willing to accept that tradeoff by paying premium prices for such vehicles.  And guess what, the auto companies are working, however imperfectly, to help their customers achieve those goals by producing the vehicles that the customer is demanding.

      I am not sure that I agree with the statement that the "real cost" of gasoline is $5, if through efficient and effective mitigation of the externalities, both for the consumer and producers can be mitigated more cheaply.  The oil companies are concerned about maintaining their margin irrespective of the cost.  I believe that the oil companies are doing this to cover their cost of limiting their externalities.  Last time I looked, Exxon-Mobil was not in danger of going out of business, nor is it losing money.  A high price for gas will drive the long-term consumer strategy to take real steps to limit demand and move toward cleaner technologies which will again limit demand.

      Amazin' how supply and demand works.  Demand begets supply.

      The oil companies' protestations, and the Republican Party's as well, that we only need to increase the supply and costs associated with relaxing environmental standards and drilling in ANWR simply do not wash when the reality is that they simply pass these costs on to the consumer when they are incurred.

      •  The "externality" of global climate change hasn't (1+ / 0-)
        Recommended by:
        Ohiodem1

        been reflected at all in the price of gasoline.

        Nitrous oxide is also being pumped into the air. Add to that Congestion and huge public subsidies for private autos etc. there is still much mitigation which hasn't happened.

        •  I'm willing to pay for a reduction in (0+ / 0-)

          nitrous oxide as well.  In this case, it starts with implementing a standard that sets doable targets for additional NOx reduction by a reasonable date.  If that costs the oil refiner an extra 50 cents to eliminate NOx emissions, and the result is far cleaner air, again, that is worth paying for.

          The developement of alternative fuels with lower NOx emissions would also be encouraged (incentivized in Republican speak) by an increase in the demand for such fuels.  An example of such a fuel might be butanol.   Butanol research/commercialization company  A fuel with no nitrogen in it to begin with does not blow it out the tailpipe.

          Another massive source of NOx are our hundreds of coal-fired power plants, the owners of which fight regulations that propose cleanup of their smokestack gases tooth and nail.  A small town on the Ohio River, called Cheshire, Ohio had to be bought out because a power plant would not quit polluting the air and water so badly that the town became uninhabitable.

          The same "subsidies" that provide infrastructure for private autos also provide the means of moving our nation's goods and services over our streets and highways.

          Maybe some of those subsidies should be redirected to adequate and efficient public transportation that has the power, if properly configured, to put millions of auto trips daily off our nation's highways.  SoCal certainly has demonstrated a need for such improvements in its transportation infrastructure.

  •  Clinton has a highly negative mailer and ad... (0+ / 0-)

    running in Indiana saying Obama is in the pocket of the oil companies. If someone could point out simply that her proposal to reduce gas taxes PUTS money in their (big oil) pocket, it would undermine her deceptive ads.

    But you can't use the concept of inelasticity because it's too complicated in a 30 second spot!

  •  Not one of your best (0+ / 0-)

    with regards to the Krugman angle - it seems like a giant strawman you've built to unfairly attempt to discredit him. Especially with your update on Krugman's column criticizing McCain - not just on the gas tax, as you seem to imply - but on his tax policies in general. Krugman is doing a good thing in criticizing McCain's joke of a tax policy, something that most of the media is doing its best to avoid, and mischaracterizing it for the sake of scoring some primary points is rather unfortunate.

    by bucking the current media reluctance to tackle McCain, Krugman is helping democrats, including Obama, paint a truer picture of the dangers of a McCain presidency.

    that should be applauded, not castigated.

    Seems like you would have had a much better peice focusing just on Clinton's gas tax idea mirroring McCain's and why that policy is flawed. By focusing on Krugman's percieved bias, you seem to have revealed your own.

    •  It would be hard to be unfair to Krugman (0+ / 0-)

      on this issue, since he has his soapbox to declaim from, and since it is he who has been repeatedly one-sided in promoting HRC.  

      That McCain has a joke of a tax policy makes him an easy target -- indeed an easier one for an Op Ed columnist than for a candidate. That doesn't make Krugman a hero-warrior for Good over Evil.

      •  If he's such an easy target (0+ / 0-)

        why isn't more of the MSM media sticking out? Because the easy road is to say nothing, like just about everyone but Krugman is doing.

        he has a soapbox - and he's using it. And rightly so on this issue imo. Sorry to disagree, but with the way the media fawns over McCain constantly, it does make him a hero. And he certainly shouldn't be criticized by us over it.

  •  Great diary Poblano (1+ / 0-)
    Recommended by:
    zackamac

    I'm shocked that this has not received more attention, given that it's a huge policy difference between Obama and the remaining candidates. It also nicely represents the political opportunism of Senator Clinton and the McCain-Republican philosophy that tax cuts are the solution to every problem.

    Thank you for writing the diary -- and Krugman, we're waiting for you to mention this in your column.

  •  Clinton offset her gas tax proposal (0+ / 0-)

    she suggested that the highway funding be accomplished during the summer months by other funding.

    So for her it's less irresponsible than mcain.

    I can't stand clinton, but it's fair to say they have different gas tax proposals.

  •  About the "gas tax" (0+ / 0-)

    While from my standpoint, almost any policy that encourages fossil fuel consumption is bad thing, there is a very important economic distinction between the Illinois gas tax and the federal gas tax.  Namely, the Illinois gas tax is assessed on a percentage basis, whereas the federal tax is assessed on a flat, per-gallon basis.

    Not true. Illinois and Indiana each have a separate, per gallon gas tax (57.9 and 50.1 cents, respectively) that goes toward highway funding. Like many other states, they also roll in general sales taxes (6.25% for IL, 6% for IN) into the price of gas that goes toward the general fund. It was the general sales taxes that Illinois and Indiana suspended for several months. The 1.25% tax rate in IL is charged on everything, including food. As a result of the suspension, highway funding felt no effect.

    These tax suspensions are not likely to be redone as Bush has so farked up state revenues as opposed to 2000.

    http://drsquid.blogspot.com

    by Dr Squid on Mon Apr 28, 2008 at 11:23:58 AM PDT

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