But now comes the best evidence yet of Clinton's economic beliefs. Ms. Clinton was so horrified by Exxon's profits this quarter that she felt the need to issue a press release criticizing the company and the state of our country.
There is something seriously wrong with our economy when Exxon's record $11 billion in quarterly profits are seen as a disappointment by Wall Street. This is truly Dick Cheney's wonderland.
This makes me wonder what exactly Clinton's economic policies are. Apparently making a profit is bad? She continues:
But on Main Street, middle class families are facing devastating choices every day between buying groceries and filling up their gas tanks to get to work. They are being squeezed by a vice grip of record high gas prices, record declines in housing values and an economy that is shedding jobs and tumbling into recession.
I believe these families need immediate relief. That's why I have called for making Exxon and other oil companies with record profits pay the federal gas tax this summer. Now, Senator Obama doesn't believe in any kind of gas tax holiday. And Senator McCain doesn't want to pay for one. I believe we should impose a windfall profits tax on big oil companies and use that money to suspend the gas tax and give families relief at the pump.
Clinton's concern for middle class families is of course very touching. But the tax itself, first proposed by McCain and now modified by Clinton, is far less inspiring.
Any even semi-rigorous review of the proposed tax shows how worthless it is. As Prof. Mankiw points out in the article, this tax is a clear situation in which the producers will simply pass the tax on to the consumers. The tax will have no appreciable impact on prices whatsoever. Even if the producers did not pass the cost on, analysis suggests that the increase in demand caused by the deflated prices would re-raise the price by most of the proposed 18 cent decrease.
This proposal illustrates the fundamental problem with presidential economics. It is constantly in the candidates' political interests to support economic policies with absolutely no merit, mostly because of the general ignorance of the public when it comes to such proposals. All the press publishes is that Clinton and McCain want to cut gas prices by 18 cents. Who is going to disagree with that?
Shame on McCain and Clinton for supporting this idea and, in doing so, blatantly pandering to public opinion. I find both candidates' stance equally disgusting - McCain for supporting it while trying to pretend some depth of integrity, and Clinton for supporting a do-nothing idea under the guise of saving her beloved middle class, successfully turning the debate into a fake issue of morality. Congratulations to Senator Obama, the only one with enough sense to oppose the idea.
2 comments:
I'm going to have to agree that moving the tax from consumers to producers, as in Clinton's plan, seems to be more of a public relations tactic than any real policy. The portion of the tax paid by consumers and the portion paid by producers is dependent mostly on the price elasticities of supply and demand. Shifting the tax around is not going to change this much.
However, McCain's gas tax policy could be interesting, I feel, because he's not simply shifting a tax around between producers and consumers. He's going to have the government eat the tax as a lightly sautéed dish of lost revenues. Price elasticity of demand for gasoline seems to mostly be inelastic, so we could potentially see an actual reduction in gas prices with this policy. I have no idea whether or not this is a good thing.
I agree with Kevin that McCain's gas tax prolicy makes a little bit more sense. However, I would also add that even if consumers would enjoy most of the tax reduction (for some magical reasons not yet explained by economic theories), the impacts does not seem to make much of a difference. A cut of 18 cents per gallon translates into a $2-3 a tank for most fill-ups. Doing the math shows that it will save the average gasoline consumer around $25 a month - a cost most of us can afford.
Instead of spending so much efforts on insignificant policies, the presidential candidates should be thinking about a long-term strategy to reduce dependency on foreign oil. Gas prices are increasing because an increase demand from China and India. Most analysts expect demand to rise more in the foreseeable future.
While demand from developing countries is out of their control, US policy makers can reduce demand at home. I know most of you would not like it, but I really do not understand why Americans need huge SUVs and pickup trucks, which consume almost twice as much gasoline as small cars, to drive around when a much more fuel-efficient car can do the Job. Policy makers should see high gas prices as an opportunity to shift consumers' behavior into more efficient cars (smaller cars or hybrids). They should also see it as an opportunity to invest in alternative energy and cleaner technologies (it seems that the technology for 100% electric vehicles is already here).
That being said, I think that McCain and Clinton are at least proactive and suggest some actions to be taken, while Obama doesn't contribute any ideas. In this particular case I don't know what's worst - offering bad polices or offering none at all. As an election strategy, it seems that the latter is superior -- not only you do not need to defend your own policies, but you also get to criticize the others' incompetent policies.
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