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McCain reveals cynicism, hypocrisy with call for summer gas-tax holiday, energy budget freeze

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"McCain reveals cynicism, hypocrisy with call for summer gas-tax holiday, energy budget freeze"

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Any remaining glimmer of hope that Senator John McCain might be the principled, non-cynical politician to transform our energy policy and avoid the dual calamaties of peak oil and climate catastrophe died today. The Associated Press reported that:

John McCain wants the federal government to free people from paying gasoline taxes this summer … aimed at stemming pain from the country’s troubled economy….

To help people weather the downturn immediately, McCain was calling for Congress to institute a “gas-tax holiday” by suspending the 18.4 cent federal gas tax and 24.4 cent diesel tax from Memorial Day to Labor Day….

Among other proposals, McCain said he would … Suspend for one year all increases in discretionary spending for agencies other than those that cover the military and veterans.

Sad. In fact, doubly sad.

Okay — let’s provide more tax relief to the American people, as progressives have been pushing hard to do. So why not cut income or payroll taxes or give the public a larger direct rebate — one that is linked to income so that the rich don’t get yet more money that should be going to middle class and poor. Cutting the gas tax will send a lot of money to the rich, and not bloody much money to the people who can’t afford a car, especially the urban poor. Who is out of touch?

[UPDATE (revised): I examine the regressivity of the gas tax in another post (see here). Bottom line -- as a 2003 study for the state of California found, "A gas tax would be regressive only across upper-income groups, in this case only in the top half of the income distribution."]

The AP describes McCain’s strategy as pursuing “a trickle-down effect.” McCain says “because the cost of gas affects the price of food, packaging, and just about everything else, these immediate steps will help to spread relief across the American economy” [his speech is on his website here]. What? So we have a temporary gasoline tax cut that directly helps people who drive a lot and that eventually trickles down to the price of … “packaging” (!), which in turn will trickle down to the poor and everyone else. Seriously.

Progressives should calculate the value of the McCain tax cut and offer the same amount directly to the poor and middle class. Enough trickle down nonsense already.

And no — I am not terribly concerned that lowering the gas tax will temporarily boost gasoline usage and greenhouse gas emissions (although it obviously will a little bit). What I am terribly concerned about is that this strongly suggests a President McCain would be prepared to walk away from the price for carbon he plans to impose upon the public — the first time there is a recession after a cap & trade bill is passed.

Let’s be very clear — the greatest threat to the long-term health and well-being of this country is unrestricted greenhouse gas emissions. The key strategy that McCain and Obama and Clinton have embraced is a cap on emissions coupled with a trading system that sets a market price for carbon dioxide. That is how you get decarbonization at the lowest possible cost. Now, the greatest threat to the success of a cap and trade system is that somebody might artificially limit the carbon price, either through a safety valve designed into the system (see here) or because some weak-kneed President (or Congress) walks away from that price the first time the economy suffers a downturn.

McCain would appear to be that weak-kneed Presidential hopeful — especially given that he has also walked away from using “mandatory” to describe his cap and trade system (see here and here). Perhaps this is what he means by not “mandatory” — the cap disappears the first time there is a recession or energy prices spike.

MCCAIN’S RECESSIONARY SPENDING CUTS

And then there is his equally lame desire to freeze all increases in nonmilitary discretionary spending — proposed in the middle of a recession no less. Doesn’t he know that government spending is an economic stimulus?

And, such a freeze would eliminate all of the increases in the clean energy budget that Congress has been voting for to make up for the cuts of the Bush administration.

If McCain would freeze such spending during a recession, then presumably he would cut such spending once we are out of the recession — especially since we are going to have to pay for his renewal of the trillion-dollar Bush tax cuts for the wealthy and his 100-year occupation of Iraq, while desperately trying to not balloon the budget deficit even further.

This misguided policy view reflects the earlier statements by McCain campaign policy adviser Douglas Holtz-Eakin:

“The basic idea is if you go with a cap and trade and do it right with appropriate implementation, you don’t need technology-specific and sectoral policies that are on the books and that others are proposing simultaneously.”

And remember, although McCain supports much greater subsidies for the mature nuclear power industry, when he was asked, “What’s your position on subsidies for green technologies like wind and solar?” he said:

“I’m not one who believes that we need to subsidize things. The wind industry is doing fine, the solar industry is doing fine. In the ’70s, we gave too many subsidies and too much help, and we had substandard products sold to the American people, which then made them disenchanted with solar for a long time.”

So McCain talks a very good game about global warming and concern about rising dependence on oil — heck, he’s got Jim Woolsey pitching his energy policy for him — but he doesn’t walk the walk. I’m not even sure he’s near the right path. If you care about oil or climate, McCain is obviously not the one.

Related Posts:

If you want to read some political spin on this, DailyKos has an analysis (here).

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4 Responses to McCain reveals cynicism, hypocrisy with call for summer gas-tax holiday, energy budget freeze

  1. Paul K says:

    Joe,
    You have correctly said taxation is not the way to get to your desired carbon price. Your criticism of McCain is spin. I’m interested in seeing your post on regressivity. I hope your argument will be base on more than one contrarian speculative working paper. Note that NBER Working Papers have not undergone the review accorded official NBER publications; in particular, they have not been submitted for approval by the Board of directors.

    [JR: I switched references now that I finished the second post. So NBER reference no longer valid.]

  2. Joe says:

    “Contrarian” is the wrong word, as you’ll see.

    The criticism is not spin. His full proposal is cynical and hypocritical for someone claiming to care about oil consumption and global — and the economy, for that matter.

  3. Jonathan says:

    “Trillion Dollar Bush Tax cuts for the wealthy”??

    Hmm. According to the Congressional Budget Office, the rich have been paying more taxes as a result of the Bush tax cuts and the middle class paying less. Here are the figures for Total Federal Income Liability for the upper quintile for the years 1997, 2000, 2003, and 2005: 78.2%, 81.2%, 84.8 % and 86.3%. For the middle quintile: 7.2%, 5.7%, 4.7%, and 4.4%. Even the 4th quintile saw a reduction from 18.3% in 1997 to 13.1% in 2005.

    Who’s paying their fair share when the top 20% income level pays 86% of the income tax? (and no, I am not in that bracket)

  4. Peter Wood says:

    For a carbon price (whatever form it takes) to be the most effective, it should cover as much of the economy as possible. What McCain is suggesting is the burden of greenhouse gas reduction should be shifted away from the transport sector. But if McCain wanted to reduce the cost of greenhouse gas emission reductions for the transport sector (for whatever perverse reason), he could have done that in other ways that would not have eliminated the incentive to reduce greenhouse gas emissions like his incentive does.

    Your comments on McCains macroeconomic policies also seem to suggest that McCain or his advisors have a poor understanding of economics. Unfortunately it seems like this poor understanding may lead to poor greenhouse gas emission reduction strategies, if any.

    On the subject of regressiveness, if a carbon price is high enough, there will be regressive impacts. The correct way to address this is by the tax and social security systems more progressive, not by eliminating incentives to reduce greenhouse gas emissions.