Hillary and the Gas Tax: More Mind-Numbing Hypocrisy on the Campaign Trail

Jon Stewart opens 'Panderer's Box'

If there's one thing consistent about Hillary Clinton's Presidential campaign, it's that nothing about her stances are consistent. Be it on the issue of the war in Iraq (which she voted to approve), or troop withdrawals (where she once agreed with John McCain), or gas taxes, she has proven time and again that she is willing to say nearly anything to get elected.

Political posturing is nothing new, of course, but that the wealthiest and most politically-connected of the trio of remaining candidates is allowed to pose as the least elitist of the bunch is preposterous and a terrible failing of journalistic rigor and public use of reason. Just because someone gives a speech on the back of a pick-up truck doesn't mean she's an average person. When this is all over, she'll go back to one of her houses, take weekends to places you would be barred from, and go back to her day job ensuring that the public gets just enough carrots to keep them at bay.

The central theme to Clinton's faux populism in recent weeks has been the gas-tax holiday, an idea first proposed (this election cycle) by John McCain. Not surprisingly, given the media's typical unquestioning, non-skeptical disposition, she has been able to brush aside nearly every economist and the suggestion--a correct one, I think--that the proposal is a worthless gimmick which doesn't address the root causes.

Apparently, in terms of the economy, 'elite' means 'everyone.' The economy, of course, is one place where she's "not going to put [her] lot in with economists." Economists may know a lot about economic issues, to be sure, but until they've been driven by the Secret Service and had their gas paid for, they don't know what true Americans want.

One supposes, then, that a non-elitist economic opinion might be found by asking Senatorial-candidate Clinton what she thinks of the gas-tax repeal:

[O]ne of my fundamental disagreements during this campaign with my opponent was when he called for the repeal of the gas tax. Now, the gas tax is one of those few taxes that New York actually gets more money from Washington than we send. And we are totally reliant on it to do things like finishing I-86 in the Southern Tier, or the fast- ferry harbor works up in Rochester, as well as the work we need to do here in the city. So you can count on me to support infrastructure.

Oh.

From a contemporaneous article:

Rep. Rick Lazio and Hillary Rodham Clinton continued trading swings on the gas tax as they campaigned for the Senate yesterday, with Clinton accusing Lazio of "siding with the Republican leadership instead of the needs and interests of the people of New York" on the issue.

So, there you have it: Supporting a gas-tax repeal is elitist and in opposition to the will of the people. Unless Clinton subsequently proposes a repeal, in which case the terms are reversed. No logical fallacies here.

Anything else you'd like to add, Senatorial-candidate Clinton?:

Clinton, meanwhile, lashed out at Lazio's plan to repeal 4.3 cents of the gas tax, calling it "a bad deal for New York and a potential bonanza for the oil companies."

Either Hillary forgot her economics or she's pandering in the most recent race for office. I'll settle on the latter.

The problem is, Clinton knows she's full of it. When every economist refutes your idea, it's not out of elitism. Johnathan Alter expands upon a few of the reasons. To paraphrase:

• The oil companies are not inclined--or required--to keep prices level. There's nothing to prevent them from raising prices in response and pocketing the difference


• The plan would save maybe $30 per person. Less than a tank of gas.


• The Department of Transportation says it would cost 300,000 jobs. Assuming they're anywhere near the ballpark, that's a steep price to pay for Mrs. Champion-of-Blue-Collar-America. It's a little hard to go around saying you're going to save working-class jobs if you're actively pursuing a proposal that would eliminate them.


• Most importantly: There's no way the plan is going to happen. Clinton knows it. McCain knows it. Everyone knows it.

When asked to explain the change of heart, Clinton's campaign suggests that they have a way to pay for the lost revenue, unlike Lazio in 2000. First, Lazio did have a plan to use the Federal surplus. That wouldn't have materialized, either, but he did have a plan, workable or not.

Second, Clinton's proposal is to use a windfall profits tax on the oil companies to pay for the budget shortfall, a suggestion that brings even more improbabilities into the fray. She's already used the windfall profits tax once in her campaign rhetoric, so essentially, she's spending that money twice. Again, the oil companies will gladly offset the new tax by raising prices, so the consumer will see none of it. And, finally, there's no possibility of said profits tax being enacted, certainly not by Memorial Day, as Congress already rejected the idea in December.

Clinton has staked her campaign on a plan that she, herself, has rejected outright in the past, utilized economics she knows aren't founded in reality, and proposed a politically-non-viable solution to high gas prices that is an outright pander for votes. I doubt we hear anything more of the gas-tax holiday after the upcoming primaries. In fact, I would be surprised if it doesn't just vanish down the memory hole, like so many of Clinton's campaign tactics and metrics for nomination.

After this proposal dies out, she'll work on her stock alchemist understanding of the electoral process and return to concocting a formula for which states' votes count, don't count, or count twice.

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Taking a Holiday from Reality

In what is becoming a theme--with the space between the right and Hillary Clinton becoming ever narrower (rhetorically at least)--the gas-tax holiday first proposed by John McCain has been co-opted by Clinton in recent weeks and become a sudden cause celebre. That her outright pilfering of McCain's proposal in full view has propelled her to a point where she's adopting Bushian rhetoric like "you're either with us or against us," while McCain has been virtually ignored on the point is but one more indication that McCain is running a campaign free of any scrutiny. Or seemingly anyone paying him any mind at all.

The American political arena has a long history of seeking out reactionary solutions that fail to address the root causes, but few so-called solutions rise (or sink) to the level of ineptitude and ineffectiveness the gas-tax holiday promises.

By nearly all accounts, the proposal would save American drivers about $25-$30 between Memorial Day and Labor Day, while driving up the demand for oil, most likely raising prices. So, essentially, what Clinton is frothing at the mouth about, complete with her Bushian rhetoric, is a plea to save the status quo.

To Barack Obama's credit, he has avoided taking the easy stance and remained true to his belief that a tax holiday is a superficial and ineffective solution that would do nothing to lower prices long term. All of which is true, but that hasn't stopped Clinton from painting Obama as enemy of the people.

The mechanism behind gas prices is well beyond the scope of this post, but it's a complex combination of supply (encompassing production and reserves), demand and speculation. The Clinton and McCain proposal does nothing to address in even a superficial manner any of those in a positive way.

ANWR

Meanwhile, the Republicans are using the leverage created by high oil prices to renew their call for drilling in ANWR. Leaving the debate over wether to drill or not aside for the moment and dealing only with its tangible effect, Reuters had an interesting assessment of just what the ANWR reserve would mean to domestic oil prices.

The Energy Information Administration, which is the Energy Department's independent analytical arm, estimated that if Congress had cleared Bush's ANWR drilling plan the oil would have been available to refiners in 2011, but only at a small volume of 40,000 barrels a day -- a drop in the bucket compared with the 20.6 million barrels the U.S. consumes daily.

At peak production, ANWR could have potentially added 780,000 barrels a day to U.S. crude oil output by 2020, according to the EIA.

The extra supplies would have cut dependence on foreign oil, but only slightly. With ANWR crude, imports would have met 60 percent of U.S. oil demand in 2020, down from 62 percent without the refuge's supplies.

A two-percent decline in imported oil is unlikely to have that significant an impact on the American consumer, and certainly wouldn't relieve us from Middle East affairs. And those numbers are of course contingent on the ANWR drilling producing output, which of course does not happen immediately, as new drilling often has a lead time of 10 years or so.

Gerald Kepes, head of the upstream oil and gas practice at the PFC Energy consulting group, said if the Interior Department had begun leasing tracts in ANWR in 2003 the first oil would had probably been flowing in 2012.

"This all assumes that there would be no environmental challenges," said Kepes, as lawsuits to block drilling could take years to resolve. "Really, 2015 is more [sic]likely."

So, the debate over drilling in ANWR is immaterial to the current prices, as the United States would still be more than 5 years out from seeing any production from the Wildlife Reserve. One can debate whether it should continue from here, for sure, but to hold the 2002 vote up as cog in the prices today is disingenuous at best.

Of course, increased American production doesn't take place in a vacuum.

Opening ANWR could have made current prices worse because Saudi Arabia may have delayed increasing its oil production capacity, making world supplies tighter and prices higher.

"Since there is a worldwide market for oil, increases in production in one place (like ANWR) could be offset by decreases in production someplace else to keep the prices high," CAP's Weiss said.

Whatever the impact on any one variable in oil prices, be it new drilling or some superficial, 3-month tax break, analysis of its impact must include all of the other variables. American production doesn't happen in a vacuum, and OPEC is not going to shrug its shoulders and not control its own production capacity.

OPEC exists for the express purpose of controlling output of oil to control price. It's by definition a cartel, and that's its raison d'etre. None of these proposals addresses the sagging value of the dollar or the influence of speculators on the price of oil. Speculators play no small role, and have played an even greater role since enactment of the 'Enron loophole' gave them nearly free reign to do as they pleased.

So perhaps when Bush talks about a "magic wand," he would be better served to focus on real solutions. Attributing gas prices to magic diverts attention from reality-based root causes, many of which, such as the 'Enron loophole,' his administration is responsible for.

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