Mankiw-Krugman commission on demand-side market approaches to reduce transportation petroleum consumption

Yeah that’s a gas tax. In 2010, America consumed 138,496,176,000 gallons of gas. If a $1/gallon failed utterly to reduce our gasoline use, it would at least raise something like $138.496176 billion every year.

Yeah that’s a gas tax.

If I were President Obama, I would propose a new blue ribbon commission with the above gobblygook title, and charge them to find economically efficient, market-based approaches to reducing gasoline consumption in this country. In this season of acrimony and genuinely deep partisan differences, this presents a rare opportunity for bipartisanship without either side’s needing to compromise core principles.

Everyone who reads the paper knows that we must reduce gasoline consumption to address a host of externalities and market failures from urban congestion to particulate pollution to national dependence on politically volatile or hostile petroleum exporters. In a billion ways, we need to change our lives, gradually but surely, to address global warming. We must also provide incentives to develop new energy sources and to develop more efficient ways to use fossil fuels. Command and control regulation has a role to play. So does targeted investment in new energy technologies. Yet markets need to play a central role. Continue reading “Mankiw-Krugman commission on demand-side market approaches to reduce transportation petroleum consumption”


By proposing the gas tax holiday, an idea only a fool or an ignoramus could take seriously, Hillary Clinton has advertised to the world that she thinks her voters are easy marks. Some of them probably resent it, or could be encouraged to do so. And the same goes for John McCain in the general election: the press has already more or less announced that the idea is bogus.

Like most bloggers, journalists, and academics, I’ve been focusing on the contempt Hillary Clinton has displayed for the whole project of reasoned discourse about public policy by insisting that the gas tax holiday is a good idea even though she can’t find anyone knowledgeable to agree, or even explain herself how it’s supposed to work. I can forgive taking silly positions &#8212 no candidate can escape it entirely &#8212 but not deliberately making a silly position into a major campaign issue. On the gas tax, obliterating Iran, and now the empty threat to break up OPEC with a lawsuit, she has managed to look completely un-Presidential, negating her claim to policy expertise based on long experience.

But there’s another aspect of the story that hasn’t, so far as I know, gotten any attention: the contempt her actions display for her voters. By embracing an idea that only a fool or an ignoramus could actually believe, she has advertised to the world that she regards her voters as easy marks, children easily distracted by shiny objects.

I can imagine an independent-expenditure TV spot on this theme.

Overweight middle-aged man with a “mountain” accent, dressed in jeans, standing in front of a pickup truck with a gunrack and an American flag bumper sticker, looking straight at the camera:

Senator Clinton, you say that cutting the gasoline tax oil companies pay would save money for consumers. Everyone who knows the oil companies knows that’s not so. The companies don’t have to pass their savings along to us, and of course they won’t. You can’t find a single expert to say the idea would work. So why do you expect us to be dumb enough to believe it anyway?

Tell the truth, Senator, it makes me sorta angry. I don’t cotton to being played for a fool.

Senator, I didn’t go to Wellesley College or Yale Law School. I don’t have a fancy house or millions of dollars. I don’t have your experience in Washington. But let’s get one thing clear, Senator Clinton. I’m not stupid.

Now, do we understand each other? [Turns away in disgust.]

Footnote One bonus from this whole flap: the mainstream press has done to Sen. Clinton what it almost never does to a Republican candidate. It has made it clear that her plan is without merit. But of course at base the Clinton plan is the McCain plan; McCain had it first. So when Barack Obama comes at John McCain over this little bit of attempted bamboozlement, the press will already be committed to the narrative “truth-teller vs. bogus idea.” The above spot works just as well with Senator McCain’s name inserted, except that he has eight fancy houses, not just one, and you’d have to take out the elite education and add a rich wife.

Expertise and elitism

Of course experts sometimes get things wrong. But a politician who breaks with the expert consensus on an issue has an obligation to explain why and how the experts are wrong. Calling expertise “elitism” is a slimy ploy, and we’ve had almost eight years of seeing how well it works in real life.

Hillary Clinton on This Week, challenged to name a single expert who thinks her gas tax holiday makes sense:

I think we’ve been for the last seven years seeing a tremendous amount of government power and elite opinion basically behind policies that haven’t worked well for the middle class and hard-working Americans.


We’ve got to get out of this mindset where somehow elite opinion is always on the side of doing things that really disadvantage the vast majority of Americans.

Note how completely Bushian these responses are. “Don’t trust them expurts.”

Of course it’s the case that experts make mistakes, and that sometimes the expert consensus is wrong. And it’s perfectly appropriate for a political leader to say, “Yes, I know that most experts in this field disagree with my position, but here’s why I think the experts are wrong about this one.”

But Clinton doesn’t do that. She doesn’t try to explain why she thinks her proposal will work. Instead, she simply appeals to ignorance. Indeed, she more or less admits that she doesn’t have a coherent plan, and certainly not one that would work for this summer:

I’m not going to put my lot in with economists, because I know if we get it right, if we actually did it right, if we had a president who used all the tools of the presidency, we would design it in such a way that it would be implemented effectively.

But she continues to insist that making “the oil companies pay the gas tax instead of consumers and drivers” &#8212 even though the federal gasoline excise tax is already collected from refiners, not consumers &#8212 is somehow a good idea, even though she can’t find an expert to agree with her and can’t herself explain how it’s supposed to work.

Of course Sen. Clinton is too intelligent and too knowledgeable to believe any of this. She hasn’t parted company with reality. (I’m less clear about Sen. McCain; he’s saner than George W. Bush, but not all that sane in absolute terms.) But by deliberately making a big campaign issue on a question where she has chosen what she knows to be the substantively wrong side, Sen. Clinton has definitely parted company with the reality-based community.

Update Bob Reich has more.

Second update A nice amateur video makes the point clearly:


Obama strikes back

The gas tax holiday won’t help consumers, even a tiny bit, unless the oil companies decide to pass it along in lower prices. Obama asks, “Does anyone here really trust the oil companies?”

Of the arguments against the McCain-Clinton gas tax holiday, the simplest is in some ways the best: cutting the tax refiners pay doesn’t mean cutting the price consumers pay. That’s a stronger argument than “It’s only $30.”

From CBS News :

“Does anyone here really trust the oil companies to give you the savings, when they could just pocket the money themselves? There’s not an expert out there that believes that this is going to work. There’s not an editorial out there that has said this is actually the answer to high gas prices. In fact my understanding is today, Senator Clinton had to send out a surrogate to speak on behalf of this plan, and all she could find was, get this, a lobbyist for Shell Oil to explain how this is going to be good for consumers. It’s a ’shell game,’ literally.”

Update: Here’s the video; the passage is at about the 11-minute mark, but the whole thing is worth watching. To my ear, Obama hasn’t gotten less eloquent as his rhetoric has gotten less high-flown and more specific.

I don’t think any of the reporting on the issue has made the point that the gasoline tax isn’t collected at retail; it’s collected from the refiner. So the Clinton claim that imposing a windfall profits tax instead of a per-gallon tax would mean “making the oil companies pay instead of the consumers” isn’t even technically true. Clinton and McCain are in effect hoping that the tax cut will trickle down to the consumers. But given refinery capacity constraints, that’s not likely to happen.

Update Obama also hit the issue hard at a press conference today, nailing Clinton to McCain and quoting lots of Democrats (Pelosi, Harkin, Hoyer, Patterson) Transcript here.

Second update Looks as if opposing the gas tax holiday won Obama the endorsement of Friends of the Earth Action, the political arm of FoE.

Footnote The Shell lobbyist is apparently Steve Elmendorf, who went on CNN as a “Democratic strategist and Clinton supporter” and explained what peachy-keen plan the tax holiday is. No one mentioned the $100K he billed Shell Oil as a lobbyist in the first half of 2007 alone. According to the Obama folks, his total take from Shell since 2006 has been $420K. Now that’s what I call a “Democratic strategist.”

Second footnote In case you doubted the power of this blog, a reader sent me a note a couple of days ago saying that Obama should ask “Why does Clinton trust the oil companies?” I neglected to post on that, and yet Obama said it just the same. Now that’s power!

Dinde Clinton et dindon Obama à la sauce Krugman

Contra Krugman, there’s a good campaign parallel between health care and climate change.

Paul Krugman tries to minimise the embarrassment of Clinton’s support for McCain’s gas tax holiday – but his appeal to the health care parallel digs the hole deeper:

I don’t regard this as a major issue. It’s a one-time thing, not a matter of principle, especially because everyone knows the gas-tax holiday isn’t actually going to happen. Health care reform, on the other hand, could happen, and is very much a long-term issue — so poisoning the well by in effect running against universality, as Obama has, is a much more serious breach.

Representing on this blog the 95% of the world’s population who are not American citizens, I must say that I’m very sorry for the 40 million of them who don’t enjoy the right to comprehensive health care which every other wealthy country affords. But American inaction on the climate affects our future directly, so it’s a more important issue to us, like a sane American anti-terrorist policy.

Are the cases really so different?

Continue reading “Dinde Clinton et dindon Obama à la sauce Krugman”

A pander too far?

Everyone hates the McClinton proposal, and some mainstream outlets are abandoning “he said/she said” to report that the gas tax holiday is a policy loser.

Rage over the McClinton gas tax holiday proposal seems to be rising, not only in Wonkistan but in the mainstream media. Chiming in so far: Matt Yglesias, James Fallows, Angry Bear, Robert Reich, Steve Benen, Jonathan Alter, Tom Friedman (!), Greg Mankiw (!!!)

Even Good Morning America seems to find the proposal a pander too far, going to the extreme length of actually explaining one reason why it’s a bad idea.

What’s especially delicious is that no one not on the McClinton payroll is actually defending the idea. (Justin Wolfers of the NYT Freakonomics blog asks whether any actual economist &#821 left-wing, right-wing, or two-handed &#8212 supports it; so far the answer is no. Paul Krugman says (falsely) that the Clinton version is “pointless rather than evil.” But that’s about the warmest praise the idea is getting. Sam Stein at HuffPo looked hard, and couldn’t find any non-campaign support for the idea; he asked Howard Wolfson to point him to an expert who liked the plan and Wolfson never responded. Even my pet Clinton troll, who wrote me in a towering rage about a post that missed the nuance of difference between the Clinton knock-off and the McCain original, isn’t willing to defend the soundness of the proposal or Clinton’s sincerity in offering it.

Is it possible &#8212 just barely possible &#8212 that McClinton has finally manged to underestimate the intelligence of the American voter and overestimate the gulliblity of the political news media?

Footnote Taylor Marsh, always good for comic relief, admits that the Clinton proposal is “silly” but is delighted that she’s pushing it because it shows that she feels the voters’ pain, unlike that elitist Obama who “doesn’t get it.”

… and ye shall receive

Obama’s anti-gas-tax-holiday TV spot is up. Effective, but not very accurate.

Not a speech, but here’s the Obama TV spot going after McClinton on the gas price holiday.

It seems to me to work pretty well, but (or perhaps because) it doesn’t say what my fellow wonks and I want it to say. It doesn’t argue with the premise that eliminating the gas tax will reduce prices in the short run; instead it points out that the benefit to the consumer would be abut $30, or the cost of half a tank of gas. And it doesn’t bite the bullet by saying that higher gasoline prices are beneficial; instead it talks about fuel efficiency standards and “oil-company price gouging.”

So I’m delighted that Obama, instead of ducking, is willing to say long and loud that a bad idea is a bad idea, but I wish he were willing to say exactly why it’s a bad idea.