Obama: “I think John McCain’s proposal for a sales-tax holiday on gasoline is a bad idea.” Oh, really?

By J.R. | April 24, 2008
Filed Under Campaigns and Elections, President |

Defending this apparent flip-flop, according to the WSJ Obama said:

“I originally voted for the suspension because I thought that it was extraordinary circumstances, given the huge hike in prices.” Gas prices averaged $1.52 a gallon in March 2000. [They’re averaging $3.51 today…nearly $2 more.]

Comments

15 Responses to “Obama: “I think John McCain’s proposal for a sales-tax holiday on gasoline is a bad idea.” Oh, really?”

LittleDavid on April 24th, 2008 10:54 am

I am not exactly an Obama supporter, however I think that on this issue he gets it right.

If we have a moratorium on the gas tax, how will the revenue be replaced?

At the end of the tax holiday, prices would just go right back up!

I have heard one economist put forth that a tax holiday will not result in any real savings for consumers anyway. His argument? The profit margins of oil companies are apt to increase so as to absorb the savings. I think there is some merit in his argument. Diesel fuel now averages about 80 cents a gallon higher, nationally, then unleaded regular gasoline. Why is that? Is it because oil companies are seeing a decrease in demand for gasoline due to the high fuel prices? (I have heard reports that they have.) But demand for diesel remains strong no matter how high the price goes (the freight still has to be moved)?

Nope, I am not in favor of a fuel tax holiday. In fact, if a weakening economy resulted in lower fuel prices, I would be in favor of increasing taxes to keep the price of diesel and gasoline about where they are. High prices encourage conservation. The fuel taxes could be used to decrease other taxes for citizens. Those that conserve fuel might actually see a windfall and those that are gluttons at the fuel pumps would be punished.

The high costs of fuel encourages conservation. As a truck driver, I am motivated by $4.00 a gallon diesel to conserve every last drop. High diesel prices motivates me to keep my rig fine tuned so as to operate as profitably as possible. Right now my truck is in Portsmouth at Western Branch Detroit Diesel getting a tuneup that I hope will restore my excellent fuel mileage. If fuel prices were lower, the expense of the tuneup might not have made good business sense. I am motivated by self interest (increased profits) to operate in the most fuel efficient manner possible. I am motivated by the costs of fuel to help America break her addiction to imported oil.

If I can get the fuel mileage of my truck back to what it was at the end of last year, I can return to increasing my profit level as the costs of fuel increases. Every price increase will result in higher profits for me. Now I am not the typical truck driver. However I think it would be a good thing for our nation if every truck driver was motivated to change and be more like me. Those that do not want to change need to be run out of business. High fuel prices are a good thing.
J.R. on April 24th, 2008 12:05 pm

LD,
I know you’re good intentioned, so I’ll give you a pass. But what you’re proposing has far-reaching economic consequences.

Also, isn’t it just a bit ironic that the companies who explore for the oil, find the oil, extract the oil, transport the oil, refine the oil, and pay all the costs and salaries associated with doing so make about 8-cents per gallon and government makes upwards of 40-cents?

Name for me another industry that we are so dependent on for our national defense and economic needs that is so taxed?
LittleDavid on April 24th, 2008 12:19 pm

The costs of energy consumption need to remain high. Those that conserve energy should be rewarded while the gluttons punished. How else are we to break our addiction to oil?

In my own industry some have been attempting to call a strike due to high fuel prices. The ones calling for the strike are the ones that insist they MUST be allowed to operate profitably while being fuel gluttons. I stand as an example of being able to increase profits for every increase in fuel costs because I conserve fuel. I will not join the strikes because doing so and being successful will take money out of my pocket. I will admit that my increased profits comes at their expense. However they can change to be like me.

Fuel gluttons should be punished. Fuel conservers should be rewarded. We’ve got to break our addiction to foreign oil.
Jeremy Hinton on April 24th, 2008 12:28 pm

If he had supported it a week ago, and now was against it, i could see this this line of criticism. But supporting a state gas tax holiday in 2000 and opposing a federal one now, 8 years later, and you think thats a gotcha? He’s not making a blanket statement on tax holidays - he’s criticizing McCain’s proposal:

“I’ve said I think John McCain’s proposal for a three-month tax holiday is a bad idea”

I voted for Gore in 2000. But i’d say casting a vote for Gore in 2008, given the current circumstances, would be just silly.

Besides, if i were to follow some of the logic i’ve heard here and other places applied to the sunsetting of the Bush tax cuts, what McCain is advocating is not only a tax-cut of $0.18/gal starting Memorial Day, but a matching Labor day tax-hike of $0.18/gal (since after all, allowing a “temporary” tax cut to expire and the tax to return is really a tax hike - right?)
J.R. on April 24th, 2008 12:45 pm

Jeremy-
It’s pretty simple –

When gas prices were much lower and much less burdensome than today, he was for a sales-tax holiday. Probably because he knew it would score him some points with constituents.

Eight years later, when “the other guy” proposes something similar, he’s against it.

Pretty simple and easy to understand.

Your voting for Gore doesn’t make sense now because he’s not running.

However, there is a need to do something about the cost of fuel now more than ever…much more so than in 2000…

It’s an apples-oranges argument.

But what I do get is pretty clear from both of you– the Democratic Party stands for higher taxes.

Higher taxes for gasoline. Higher taxes on income and capital gains.

Whew…way to stimulate that economy, boys.
LittleDavid on April 24th, 2008 1:15 pm

J.R.

If the motivation is to decrease our dependance on foreign oil? Will you not agree that we should somehow tax only that which we want less of and encourage that which we want more of? I want more conservation of fuel.

Do we want to encourage more consumption of Arab oil? More consumption results, due to peak oil, in ever increasing prices. Al Gore was condemned for proposing a 50 cent tax on fuel back in the days when fuel was cheap to encourage conservation. If such a tax had been imposed back then and the proceeds used to reward conservation, we might not be looking at the prices we now face.

Let’s give credit where credit is due. Al Gore’s proposal might have been ahead of its time, but his proposal had merit.
J.R. on April 24th, 2008 1:28 pm

LD,
I’d rather let the free market decide what we should conserve and what we shouldn’t.

It’s really just that simple. I don’t think government should penalize its citizenry because it thinks it shouldn’t be consuming something.

I just have never understood that logic. It makes things more expensive, has external effects, and tends towards socialism.

Sorry…not my cup of tea.

You make the choice to conserve, and I applaud that. You put a value on that conservation. However, others should not be forced into having that same value system.

There are ramifications for such an argument, I understand that, but I truly believe, in the long run, the free market moves us towards the most efficient and responsible choices.
LittleDavid on April 24th, 2008 2:12 pm

But what if Greenhouse gasses end the world as we know it?

Nope, I think the government should intercede to encourage fuel economy.

You might be right, we have nothing (other then peak oil) to worry about. But you might be wrong and the entire existance of our species might be determined by motivating conservation of energy.
J.R. on April 24th, 2008 2:30 pm

Self-preservation is an excellent free market motivator. You might be surprised what people are willing to do when they’re informed and allowed to make decisions rationally without government intervention.

See our motto. You’re not going to convert me on this one.
ragnar on April 24th, 2008 3:07 pm

Jim - Obama is absolutely right on on this one.

This is further proof that the straight talk express has driven straight for the land of political pandering and punditry.

First, gas is going for nearly $4 a gallon, ending the tax will save what 2-3 dollars for a full tank?

Secondly, our infrastructure is falling apart b/c no one is interested in paying taxes anymore, bridges are falling, we need those taxes to keep America moving.

Three, the past seven years has seen the greatest transfer of wealth ever from one nation to others in the history of the world thanks to the elevated price of gas. All eliminating the gas tax will do is increase demand and increase the cost of gas back to where it was before - and then, rather than have the $$ stay here in our tax coffers it will be headed to Venezuela, Saudi Arabia, Iran, etc - and undoubtably partially into the pockets of Al Qaeda. If anything we need to see an INCREASE in the gas tax (concurrent with an increased tax credit for those with incomes below a certain level to prevent the imposition of a regressive tax) in order to stop the insane wealth transfer out of our nation.

Four, let the free markets work. Increase the gas tax $1-2 per gallon, you will watch the consumption drop and concurrently the price will remain (w/in a few months) where it is now. As a result you will end the transfer of wealth, you will end the financial support to Al Qaeda, Syria, Hamas, Iran, and associated terrorist groups, and as a bonus, you’ll be positively impacting the total amount of greenhouse gases emitted (for which there is an economic cost, one that is currently ignored in our tax structure).

You talk about free markets, which is nice, but please tell me where the $$ for road repair is going to come from? Moreover, if this is going to be a true free market, then we need to stop our governmental support to oil companies, and stop giving them subsidized access to federal land and federal resources - or at least charge them whatever the market will bear? And, does your love for free markets include sending more $$ overseas - leading to the further bankrupting of our nation? This is hardly a black and white free market issue - of course, you don’t really want a true free market anyways, no one sensible does. A true free market is pure anarchy, we need order, rules and a government. The only question is where on that spectrum do we allow the markets and government to fall.
LittleDavid on April 24th, 2008 5:25 pm

J.R.

We’re not talking self preservation, we’re talking species preservation.

Perhaps you, too, are motivated by preservation of the species. However we need only watch the television to be presented with those that are motivated by something else. They are not even motivated by preservation of their families let alone the species.
Duck on April 25th, 2008 9:38 am

I’m with JR. Gas prices go up, and Congress calls Congressional hearings to grill Big Oil which as he pointed out makes less money per gallon than the gov’t. does.

Obama once supported a tax holiday. He does not now for one reason–he wants this country to be deep into a recession or depression come November cos he knows this is the surest way for him to get elected.

Why else would a candidate who feels our pain decide now–a possible recession coupled with high inflation–is a poor time to let us keep some of our hard earned money?

Unless Obama feels the gov’t. is a better steward of our money than we are. Either way I don’t like it.

Too bad we can’t bring the Congress before a Congressional hearing for trying to wean us off oil using biofuels and corn, which have been proven to be spill more carbon into the atmosphere than oil does.

That and using corn for fuel instead of food has raised food prices.

Apparently gov’t. is never the problem. That’s why we have to blame everything on Big Oil.

Cut into oil company profits, but don’t touch the government’s money! Vote Obama!

For the record, I have no problem cutting our dependence on foreign oil and oil in general. We just need to be smart.

An aside: I think it is great that the senior senator from NY yesterday announced he is now for drilling for oil domestically. Thanx for finally coming around Chuck! Wait for the train wreck before fixing the tracks.
Brian Kirwin on April 25th, 2008 9:42 am

JR hit the key point.

Oil companies make 8 cents a gallon.

Government makes 40 cents a gallon.

Who’s gouging whom?
Duck on April 25th, 2008 11:23 am

Ragnar,

Truckers who ship the products we buy and airlines who take us places would save a lot more than $2 a fill up. Without them to give us things to buy or take us places to spend money our economy falls apart.
LittleDavid on April 25th, 2008 1:03 pm

Duck,

Actually, due to the fuel surcharge, truckers who conserve fuel (like me) will actually see their profits decrease with a decrease in average fuel prices. The only truckers complaining are the ones who insist on buying the heaviest, most powerful (pay any price to be King of the Hill) rigs, drive at the fastest speed they can get away with, and idle their trucks at the truck stop when the temperature outside is 60 degrees because they can’t stand the cold (every heard of a blanket).

Just yesterday, I was informed that repairs to my truck would cost me over 2 grand to hopefully restore my trucks great fuel economy. Without the high fuel prices, I would not see the return on my investment as quickly. High fuel prices motivate me to keep my truck as fuel efficient as possible.

High diesel prices motivate me to help with our national goal, which is to break our addiction to foreign oil. It makes sense to me that the market should reward me for conserving fuel. I want the rewards for doing so to be the maximum possible. Truck drivers that are fuel gluttons should be run out of business, and the current market will do this if they are unwilling to change.