Obama gets it right on gas policy
April 24, 2008 by Abhishek
One of the rare economic issues in which I support Obama’s stance. A gas tax-holiday, at this stage, is little more than a populist gimmick. It is bad fiscal policy, bad energy policy, bad environmental policy and – as previous experience shows — will do little to provide consumer relief.
Tax cuts are good fiscal policy if accompanied by spending cuts. An absence of a gas tax is neutral enegry policy, provided other energy is not taxed. The impact of a tax cut on environmental policy depends on a variety of factors, some of which would favor such cuts.
Gas tax relief would benifit consumers if matched by equivlent spending cuts.
I agree with your generalities, but in the current circumstances, where:
1) Spending is not going to go down too much under any of the three major candidates (two of whom support this tax break)
2)Other taxes are not being given a holiday.
3)Other energy sources are still being taxed.
4)There is no cap-and-trade or carbon-tax mechanism in place
a gas-tax holiday is bad policy.