Hillary Clinton and John McCain are both suggesting that a gas tax holiday is just what the American people need to get through the summer.
I say that is the most short-sighted, stupid thing I have ever heard.
First of all, if the American people have sticker shock now, can you imagine how loud the howling will be when the tax is reinstated? What then? Call for its permanent repeal right before the election? I see no end to it.
Aside from not having a comprehensive energy policy (that's not written by the big oil companies themselves), rolling back gas taxes is the worst thing that could happen. Not having that revenue would put us farther into debt, and not solve any of the current infrastructure problems in the meantime. It also means that oil companies and OPEC would have more wiggle room to bump up prices.
When I was your age I would have agreed with you.
In the late 80s, and especially the early 90s, the "debt crises" was considered very real. The real problem with debt is the effect of federal borrowing crowding out private capital in global capital markets.
The crowd out effect, in turn, is supposed to cause an otherwise unnatural increae in interest rates.
Bubba's first two budgets (passed by a Democrat Congress) projected enormous deficits into the mid 21st Century.
Then the GOP won the 94 elections. On the heels of a booming economy the GOP balanced the budget in four years and five years out produced huge surpleses.
Then, the 2000-2001 recession Brother Bill left Brother Dubya, 9.11 and the corporate scandals, together with unabashed liberal like spending by the less disciplined Republican congresses that governed from 03-07 like the Democrats they ousted ten years before, and the two worst natural disasters in American history caused Fed spending to spike so fast that it offset the record federal revenues that Dubya's fiscal and monetary policies, and the boom years of 03-07, produced.
The lesson, fed spending usually sucks, is always less efficient than private sectore spending, but ultimately has little affect on the larger economoy.
Short term stimuli like suspending the gas tax and dumping billions into taxpayers pockets can turbocharge the economy short term without having any significant effect on the debt.
C'mon Claire, I'm your huckleberry so let's play for real. Share your response.
Posted by: The Real Sporer | May 3, 2008 9:43 AM | Permalink to Comment