The Gas Tax Holiday

Six reasons why it’s a terrible idea.

Now that both of the remaining Republican Presidential candidates have proposed a “summer holiday” from the federal gas tax, it’s worth listing all the reasons this is a bad idea.

1. With refinery capacity constrained, there’s no reason to expect a tax cut to show up at the pump. Mostly it would go to the refiners’ bottom lines.

2. If the “tax holiday” plus political pressure managed to reduce prices below their market-clearing levels, we ought to expect gas lines this summer.

3. If there weren’t a refinery constraint and the tax resulted in lower prices and higher consumption, that would increase worldwide demand for oil, to the detriment of consumers worldwide and to the benefit of the rulers of Saudi Arabia, Venezuela, Nigeria, and Russia.

4. It would also contribute to air pollution, highway congestion, and of course global warming.

5. It would also punish those who bought Priuses or found home-and-job combinations that allow walking, biking, or taking public transit to work and reward purchasers of Hummers and developers of sprawl housing.

6. And of course it would drain the already-low Transportation Trust Fund, meaning more potholes and fewer buses in the future. (That’s in the orignal version by the original Republican. The copycat version by the ersatz Republican avoids this by taking back from the oil companies with one hand what the “tax holiday” gives them with the other.)

Other than that, it’s just a hell of an idea.

Anyone (I’m looking at you, Paul Krugman) who ever criticized Obama for “repeating Republican talking points” ought to switch sides now. It may be true that, as Krugman says, financing the tax holiday with a windfall profits tax on oil companies makes it “pointless rather than evil,” but deceiving the voters is worse than pointless, and doing so in a way that supports the idea that every problem can be fixed with the appropriate tax cut is an endorsement of the ultimate Republican talking point.

If I were running the Obama campaign, I’d think about using my candidate’s famous eloquence to explain the issue in some detail and ram the lie back down Hillary Clinton’s throat, and McCain’s.

And Mike O’Hare is right as usual: the correct response when a candidate does something brave and right on a crucial issue is to send money.

Author: Mark Kleiman

Professor of Public Policy at the NYU Marron Institute for Urban Management and editor of the Journal of Drug Policy Analysis. Teaches about the methods of policy analysis about drug abuse control and crime control policy, working out the implications of two principles: that swift and certain sanctions don't have to be severe to be effective, and that well-designed threats usually don't have to be carried out. Books: Drugs and Drug Policy: What Everyone Needs to Know (with Jonathan Caulkins and Angela Hawken) When Brute Force Fails: How to Have Less Crime and Less Punishment (Princeton, 2009; named one of the "books of the year" by The Economist Against Excess: Drug Policy for Results (Basic, 1993) Marijuana: Costs of Abuse, Costs of Control (Greenwood, 1989) UCLA Homepage Curriculum Vitae Contact: