From The Hotline Latest Edition for Friday, May 2,2008

THE FIELD

Pander-monium!

Fri. May 2, 2008


On 5/1, as John McCain and Hillary Clinton pressed for a gas tax holiday, "economists, environmentalists and others roundly denounced the plan as a political stunt that would favor the oil industry rather than consumers."

"With gas prices nearing $4 per gallon in much of the country, the tax relief carries broad political appeal. But economists and other critics have ridiculed the plan," and "editorial boards across the nation have cheered" Barack Obama for opposing it.

"Economists are 'as close to unanimous as you can get' in viewing the proposal as a 'horrible idea,'" according to MIT prof. Joseph Doyle. Economist Philip Verleger "called suspension of the gas tax 'a hideously bad idea' that would let refinery owners keep some or all of the savings." Verleger: "My guess is 80% or 90% of the revenue loss for the government would go into the pockets of the oil industry -- and not trickle down to consumers.

Clinton "has called for a windfall-profits tax on oil companies to make up for the loss." McCain "has vowed to replenish the highway fund with other tax revenue, but a spokesman for his campaign declined to say what spending would be cut to preserve the roads program."

"Road builders are skeptical. They say suspension of the gas tax could jeopardize" more than 300K highway-related jobs. Transportation official Matthew Jeanneret: "It may be politically appealing, but it's bad public policy."

By encouraging consumption of gasoline, "the proposal also contradicts commitments made by both Clinton and McCain to fight global warming and cut U.S. dependence on foreign oil." Verleger: "This is true pandering to voters without any consideration of the long-term interests of the country" (Finnegan, Los Angeles Times, 5/2).

Clinton "embraced the proposal" from McCain, who first floated it on 4/15. "McCain's idea originated not with his economic advisers but with [GOP] pollster Bill McInturff."

"A day after she was photographed filling up the tank of a steelworker's pickup truck" in PA, Clinton 5/1 "used the occasion of Exxon Mobil Corp. announcing an $11 billion quarterly profit to push the idea of a gas-tax break for the seventh day."

"She said her proposal would save the average family $70 this summer, and that she would ensure the oil companies will pay through her windfall-profits tax." McCain "said he wants to give consumers a little extra to spend." McCain: "I'd like to see families in America have a relief from ever-increasing costs of gasoline so maybe at the end of the summer, after this tax holiday, they could buy school supplies for their children."

"The savings might not cover many of those back-to-school expenses." Economist Ethan Harris "said families would save only about $18 a month. Burman estimated the total savings from Memorial Day to Labor Day at $28."

Obama "has a proposal that would take money out of the pockets of oil companies and put it in the hands of the poor." It includes a windfall-profits tax that "could cost oil producers three times the $50 billion, 10-year windfall-profits tax Clinton has proposed. Obama would use the money to help pay for a $1,000 tax cut for working families, expand the earned-income tax credit and aid people in paying their energy bills" (Fitzgerald, Bloomberg, 5/2).

OMG, Economists Are Sooo Elitist!

In IA, "sounding more exasperated as the day went on," McCain "grimaced slightly when a questioner at a town-hall-style meeting asked him about the plan." McCain: "You'd think that I was attacking Western civilization as we know it. The special interests, 'Oh, my God. This will destroy our transportation system in America. This will have disastrous consequences.' Look, all I think is we ought to give low-income Americans, in particular, a little relief."

But McCain "did not say which special interests he meant." He then "suggested that low-income families were hit hardest by the cost of fuel because they typically drove longer distances to work in older-model automobiles." McCain: "Why not give them a little break? Instead, with all due respect to those who travel around in chauffeured limousines, you'd think that we are destroying the economy of America" (Bosman, New York Times, 5/2).

Clinton: "I believe it would be important to get every member of Congress on record. Do they stand with the hard-pressed Americans who are trying to pay their gas bills at the gas station or do they once again stand with the oil companies? That's a vote I'm going to try to get, because I want to know where people stand, and I want them to tell us -- are they with us or against us when it comes to taking on the oil companies?" (Memoli, NBC/National Journal, 5/1).

Congress Not So Pumped

House Dems on 5/1 "made plain" that the tax holiday "will be dead on arrival."

"It was senior aides behind the scenes who described the idea as 'DOA,' but the party's topmost leaders were clear that they sided firmly" with Obama. Speaker Nancy Pelosi (D-CA) "has left the measure off the list of energy proposals that she may try to attach to the supplemental Iraq war-spending bill." Pelosi: "[T]here's no reason to believe that any moratorium on the gas tax would be passed on to the consumer."

Pelosi "gave this apparent coup de grace to the tax holiday just a day after" Majority Leader Steny Hoyer (D-MD) "said suspending the gas tax would 'not be a policy that I would think is particularly positive'" (Allen/Kucinich, The Hill, 5/1).

Straight Talk Expressed

Newsday's Riley writes, NYC Mayor Mike Bloomberg (I) "has joined the chorus of critics of the gas tax suspension." Bloomberg: "It's about the dumbest thing I've heard in an awful long time from an economic point of view. ... Obama was right. McCain and Clinton were wrong."

More: "I don't understand why you think there's any merit to it whatsoever. We're trying to discourage people from driving and we're trying to end our energy dependence. ... The last thing we need to do is to encourage people to drive more and to take away the monies we need for infrastructure in this country. And that's what reducing taxes does. ... The 30 bucks [in savings] is not going to change anybody's lifestyle. The billions of dollars that we would otherwise have in tax revenues can make a big difference as to what kind of a world we leave our children."

He also said the tax holiday "would help [Hugo] Chavez, [Muammar] Qaddafi and other people like that." Bloomberg's point is that the holiday "would increase consumption, pushing the price right back up with higher volume and all the money going to producers. But could he be giving Obama a hint for a slogan? Like: 'Hillary Clinton and John McCain: $30 for Indianans, billions for anti-American dictators'??"

NY Gov. David Paterson (D), a Clinton supporter, "came out against a similar suspension of the state gas tax, arguing that the money wouldn't get to consumers." Also, two energy secretaries under Bill Clinton, Bill Richardson and Federico Pena, are "against" the tax holiday.

"But here's the thing: We haven't seen papers in Indiana or NC (or New York) fronting stories with headlines like, 'Gas scandal: Hillary, McCain pander with bad idea.' [Rev. Jeremiah] Wright is the big story, this is a side issue."

Clinton spokesperson Geoff Garin: "We're seeing in our polling that working people appreciate the fact that Senator Clinton understands the incredible economic strain they are facing" ("Spin Cycle," 5/2).

The Chorus

The State editorializes, McCain and Clinton "are tied in a contest that is unlikely to produce a win for either of them, or for the American people: They're competing to see which can stoop the lowest to buy our votes."

"We congratulate" Obama "for not joining in (even though he voted for a similar deal as a state legislator). This nation needs energy leadership, not cheap attempts to exploit Americans' real anxieties over prices" (5/2).

Des Moines Register editorializes, "We know that politicians have to do a little pandering once in a while to stay in the voters' good graces, but the calls" by Clinton and McCain "for a 'gas tax holiday' this summer border on craven" (5/2).

New York Sun editorializes, Clinton's plan "wouldn't really be a tax cut at all, just a shift of the tax from consumers to producers, who in any event would have to pass the new tax along to consumers, leaving the gas price at the pump the same place it was at before."

"What it amounts to, in other words, is [McCain] offering a tax cut, [Clinton] trying to look like she's offering a tax cut when in fact she's pairing a tax increase with a price hike, and [Obama] who won't even rhetorically sign on to a tax cut" (5/2).

Washington Post's Robinson writes, "There's something maddening about this presidential campaign. It has become irrelevant whether anything the candidates say actually makes sense. All that matters is how their words will 'play' with voters who are presumed to be too stupid to realize that they're the ones being played."

"And before" the McCain camp or Clinton camp "indignantly proclaims its candidate's total sincerity, I'd like to see the legislation that either of these U.S. senators has introduced to suspend the tax. I'm still waiting" (5/2).

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