ECONOMISTS AND THE GAS TAX CUT

Even a conservative economist (Mankiw) thinks the gas tax cut proposed by McWAR and supported by Hillary is bogus.

Clinton-McCain gas tax holiday slammed as bad idea
Wed Apr 30, 2008 3:25pm EDT

By Alister Bull

"Score one for Obama," wrote Greg Mankiw, a former chairman of President George W. Bush's Council of Economic Advisers. "In light of the side effects associated with driving ... gasoline taxes should be higher than they are, not lower."

Economists said that since refineries cannot increase their supply of gasoline in the space of a few summer months, lower prices will just boost demand and the benefits will flow to oil companies, not consumers.

"You are just going to push up the price of gas by almost the size of the tax cut," said Eric Toder, a senior fellow at the Urban-Brookings Tax Policy Center in Washington.

"I think it is a very bad idea," said Gilbert Metclaf, a economics professor at Tufts University currently working with the National Bureau of Economic Research.

UPDATE: Sam Stein on HuffPo finds other conservative economists who also think the cut is BS:

I started with what I thought would be my best shot, the libertarians. Jerry Taylor, a fellow for the Cato Institute, unfortunately, called the proposal a "holiday from reality."

"What would happen more likely than not, gas taxes would be cut, but pump prices wouldn't go down, service stations would just continue charging what they are charging," he said. "I'm a Libertarian and I don't mind that. But you might not be a Libertarian and you might believe the federal treasury needs that money... Now if this were a permanent reduction of the tax, I would be all for it."

"I think it is close to political pandering," said Max Schulz, a senior fellow at the Manhattan Institute. "It is bad policy and political gimmickry. If you want to deliver relief to folks you have to do more than just this little holiday from the gas tax. You have to address what is driving the price of crude oil, even problems with the weak dollar. You aren't going to win any points doing that, however. But you will get points if you get up and say let's suspend the gas tax for a few months... I never have seen the wisdom of playing gimmicks games of the tax code."

...Ken Green, an energy expert for the American Enterprise Institute, ended up being similarly dismissive.

"There would be economic sense in eliminating the gas tax completely and replacing it with tolls. That would make sense," he said, "but if you remove the tax now, the things being funded with the money will still need funds. Or it will be funded with taxpayer's dollars from other things. So it will be less at the pump and more in your tax bill."

He went on: "All of these candidates claim to be environmentally conscious people, so what do they want to do? Lower the cost of driving in the summer time when it is the highest demand in the first place."