McCain Claims Offshore Drilling Provides ‘Psychological’ Benefits»

At a townhall event in Fresno, CA, yesterday, Sen. John McCain (R-AZ) reiterated his call for a gas tax holiday “to give you a little relief for the summer.” As NBC reports, he then promoted his support for lifting the offshore drilling moratorium, admitting that it wouldn’t provide any “immediate relief“:

I don’t see an immediate relief, but I do see that exploitation of existing reserves that may exist — and in view of many experts that do exist off our coasts — is also a way that we need to provide relief. Even though it may take some years, the fact that we are exploiting those reserves would have a psychological impact that I think is beneficial.

Two months ago, he promoted the useless and feckless gas tax holiday for its “psychological boost,” so it makes sense that McCain is now promoting a useless and destructive expansion of offshore drilling for its “psychological” impact. Why is he offering “psychological” solutions to $4 gas? McCain argues that “a lot of our problems today” are “psychological,” including “the confidence, trust, the uncertainty about our economic future,” and even “the ability to keep our own home.”

Watch it again:

While skyrocketing gas prices, foreclosures, unemployment, food prices, climate disasters, and continued war certainly do bring significant psychological damage to those affected, the right way to deal with those issues isn’t to offer right-wing Prozac — it’s to solve the problems. And McCain’s incoherent and unhealthy policy prescriptions certainly won’t.

UPDATE: Here’s the video of McCain in Fresno:

UPDATE II: At the Carpetbagger Report, Steve Benen notes the bizarre inconsistencies of McCain saying his ideas are “practical” but only have “psychological” benefits:

The incoherence here is breathtaking. McCain believes drilling is part of a short-term solution. He also believes drilling offers no real short-term solutions. McCain believes a gas-tax holiday will produce big savings for consumers. And no savings for consumers. McCain believes we need pragmatic policies that work. He also believes we need psychic policies that make people happy whether they work or not.

McCain Clueless On Impact Of Gas-Tax Holiday»

Today, during a town hall meeting in Fresno, California, Sen. John McCain (R-AZ) advocated boosting funding for public transportation. Replying to a question about increasing fuel prices, McCain joked that public transportation was the only issue “we agree on.”

But the senator’s sudden embrace of public transportation contradicts his vocal support for the gas-tax holiday. In fact, according to the American Public Transportation Association, McCain’s proposal to suspend the gas-tax “runs counter to the public demand for more public transportation“:

The truth is that we need the federal gas tax to pay for the much needed highway and public transportation infrastructure. Do we really want our bridges to fall down? No. Do we want to see bus routes and train lines cut? No. Americans are used to their independence and want their transportation systems to not only be maintained, but improved and expanded.

McCain’s gas-tax proposal “would eliminate $1.4 billion of federal funding for public transportation and severely restrict the industry’s ability to add and improve transit services for a growing number of Americans.”

It seems that the gas tax holiday is just one more issue that “is not something” McCain has “understood as well” he should.

McCain To Economists: I Can’t Hear You!»

Campaigning yesterday in New Hampshire, Sen. John McCain (R-AZ) renewed his call for a gas tax “holiday” and angrily attacked critics who have pointed out it’s a bad policy:

If you want to call it a gimmick, fine. You know the economists? They’re the same ones that didn’t predict this housing crisis we’re now in.

Watch it:

McCain is now resorting to false ad hominem attacks to defend his pandering proposal. In fact, numerous progressive economists who have been prominent critics of the gas tax holiday have also been warning for years about the housing bubble inflated by McCain’s favorite economist, Alan Greenspan:

– Joseph Stiglitz, Ph.D. in economics from Massachusetts Institute of Technology, Nobel Prize in Economics, 2001:

“Lower interest rates worked, but not so much because they boosted investment, but because they led households to refinance their mortgages, and fueled a bubble in housing prices. In short, as Greenspan departs, he leaves behind an American economy burdened with high household and government debt and fragile balance sheets – a legacy that is already contributing to global financial instability.” [Pakistan Daily Times, 11/11/05]

– Paul Krugman, Ph. D. in economics from Massachusetts Institute of Technology:

“In spite of record home prices, housing in most of America remains surprisingly affordable, thanks to low interest rates. That fact may seem to say that there’s no housing bubble. But it doesn’t.” [NYT, 1/2/06]

– Duncan Black, Ph.D. in economics from Brown University:

“As I’ve said a few times, while I’ve long thought that the housing bubble was indeed a bubble and I knew that people were taking out really stupid mortgages that would come back and bite them in the ass, I really had no idea that lending standards had gotten so bad. . . And this illustrates that this isn’t just a “subprime” problem. Million+ mortgages aren’t subprime. [Eschaton, 11/25/07]

“We’re at the top of a housing bubble (it may not pop, but I can’t see it continuing to rise), so it’s generally cheaper to rent in these areas than to buy.” [Eschaton, 4/24/05]

– Dean Baker, Ph.D. in economics from the University of Michigan:

“We can design a mechanism that will directly benefit millions of moderate income homeowners who are struggling to hang on to their homes. Or, we can come up with schemes that will benefit the banks and hedge funds who speculated in mortgage debt.” [TPMCafé, 8/19/07]

“When the housing bubble bursts, we will see the loss of $5 trillion in housing bubble wealth…. The economic fallout will also be enormous.” [MaxSpeak, 8/3/05]

“In the absence of any other credible theory, the only plausible explanation for the sudden surge in home prices is the existence of a housing bubble. This means that a major factor driving housing sales is the expectation that housing prices will be higher in the future. While this process can sustain rising prices for a period of time, it must eventually come to an end.” [CEPR, 8/02]

Or Senator McCain could just have read Think Progress:

“Sen. John McCain’s (R-AZ) ‘pandering’ proposal for a ‘gas tax holiday’ is smart politics but bad policy.” [Think Progress Wonk Room, 4/18/08]

“Home ownership in America may be up today, but in a nasty flip side to that coin, foreclosures are also on the rise, forcing Americans into financial disaster. . . First, skyrocketing costs across the board — health care, education, retirement - combined with lower wages are leaving many Americans in financially precarious positions. . . Second, blame predatory lenders. Just like credit card companies, which make their big bucks by aggressively marketing their products to high-risk consumers– such as college students, low wage workers and the newly bankrupt, mortgage brokers and banks have been marketing riskier ways for Americans to buy homes.” [Think Progress, 5/31/05]

UPDATE: Steve Benen at the Carpetbagger Report writes:

The problem isn’t the economists, it’s McCain’s reluctance to listen to anyone outside his bubble. Well, that and his own ignorance, despite three decades as a Washington insider.

McCain’s Gas-Tax Holiday From Reality Continues»

Two weeks ago, Sen. John McCain (R-AZ) proposed a summer-long “gas tax holiday.” Since then, he’s been faced with the challenge that such a moratorium may sound good but would be terrible policy.

When it was pointed out that the federal gas tax funds critical transportation infrastructure and jobs, a spokesman said McCain would pay the $11 billion tab from the “general revenue.”

When it was pointed out that cutting the federal gas tax would minimally affect the price at the pump, McCain then said his proposal was just “a little psychological boost.”

When it was pointed out today by MSNBC anchor Mika Brzezinski that the tax cut is an expensive and environmentally unsound policy that would do nothing to help American drivers, McCain finally erupted:

Mika, you know what? All it is is it’s not the end of Western civilization as we know it according to some, quote, economists and some around America. It’s just to give Americans a little relief.

He then exposed how out of touch he is with the realities of America by saying:

I think it’s obvious that the lowest-income Americans drive the furthest and probably they spend more on gasoline because of the age of their automobiles.

In fact, lowest-income Americans drive the least, and most of the benefits of the gas-tax holiday would go to high-income Americans.

No amount of bluster can disguise that this proposal — just as it was when Sen. Bob Dole proposed a similar gas tax holiday as the Republican presidential nominee in 1996 — is a violation of the responsible economic principles Sen. McCain has formerly espoused.

UPDATE [5:30 PM]: Michael Bloomberg, the mayor of New York City, tells the Observer a gas tax holiday “would help Chavez, Qaddafi and other people like that.” He also said:

It’s the dumbest thing I’ve heard in an awful long time from an economic point of view. I don’t understand why you think there’s any merit to it whatsoever. We’re trying to discourage people from driving and we’re trying to end our energy dependence. We don’t do that — oh, and incidentally, we’re trying to have more money to build infrastructure. All three of those things go fly in the face of giving everybody $30 a year. The $30 bucks is not going to change anybody’s lifestyle. The billions of dollars that we would otherwise have in tax revenues can make a big difference as to what kind of a world we leave our children.

Senator Cornyn Says McCain’s Gas Tax Holiday ‘Drives Up The Deficit’»

On Fox News this morning, Sen. John Cornyn (R-TX) discussed rising gas prices and criticized the proposal to pay for a federal gas tax holiday with “revenue from the general treasury”:

Well, the problem with that is, while it would provide some temporary relief, it’s only about 18.4 cents a gallon. It would provide maybe a couple of bucks, as you say, for the fill-up. But the problem is that’s the money we use to build our roads and to repair our aging infrastructure. Others have said, well, we’ll simply fill the gas trust fund up with revenue from the general treasury, but of course that drives up the deficit.

Watch it:

Who is Sen. Cornyn talking about? McCain spokesman Brian Rogers has the answer:

Sen. McCain believes that general revenue transfers should be made to offset the impact on the transportation fund.

McCain Gas Tax Holiday Worth Only 60 Cents a Day»

Our guest blogger is Sam Davis, Policy Analyst at the Center for American Progress Action Fund.

Sen. John McCain (R-AZ) has a prescription for the country’s gas woes, proposing to put the 18.4 cent federal gas tax on a three-month hiatus between Memorial Day and Labor Day. Indeed, we’ve heard this idea once before and economists continue to be weary of its intended net effect. What’s different this time however, is the spin and the reality.

Spin: Outlining his proposal, Senator McCain said last Tuesday, “The effect will take a few dollars off the price of a tank of gas every time a family, a farmer, or trucker stops to fill up.”

Reality: Most of the tax break will go to corporations, not families. Oil companies and their executives are already doing better than ever. Two years ago, Lee Raymond, former CEO of Exxon was given a severance package worth upwards of $400 million after leading the company to its highest ever recorded profit in 2006 of $36 billion. The previous year, his salary and bonus was a combined: $69.7 million or $190,915 a day. After just his first year on the job, current Exxon CEO, Rex Tillerson oversaw another record profit year for the company of $40 billion, earning him $21.7 million or $59,452 a day.

Even if all of the benefits from the tax breaks go to families, however, it will make little difference for them. The median American family’s daily savings during the three-month tax holiday proposed by Senator McCain? 60¢.

Spin: McCain told CNBC this past Tuesday, “I think high gas taxes are a regressive tax. The people who drive the furthest are the lowest income Americans. It is incredibly regressive. Where’s the fairness there?”

Reality: Not only do families who make less, drive less, they do not consume more gasoline nor do they spend more on gasoline. An analysis of the latest available data reveals that in fact, Senator McCain’s “gas-tax holiday” idea is itself regressive. The more a family earns, the more they drive, and the more a higher-earning household would save under Senator McCain’s plan.

Methodology: Read the rest of this entry »

Confused Again: McCain’s Gas Tax Holiday Violates His Own Principles»

Sen. John McCain’s (R-AZ) “pandering” proposal for a “gas tax holiday” is smart politics but bad policy. A few months ago, Sen. McCain seemed to understand that.

When asked at the January 10, 2008 GOP debate what the government should do to respond to the looming recession, McCain responded:

We need to stop the spending. And that way we can get our budget under control and we can have a — basically a strong, fundamental fiscal underpinnings.

The second thing that we need to do, of course, is stop spending $400 billion a year overseas to oil-producing countries that come right out of our economy immediately. Some of that money goes, unfortunately, to fund terrorist organizations.

We’ve got to — and we can use Detroit for this, where there’s tremendous technology in the state of Michigan, and tremendous abilities to develop technologies to reduce this dependency on foreign oil, and eventually eliminate it, and stop this outflow of some $400 billion a year. Education and training is obviously important, but stop the spending.

How does McCain’s proposal to suspend the federal gas tax from Memorial Day to Labor Day violate those precepts?

McCain’s Holiday Would Cost $11 Billion. Suspending the gas tax — whose revenues are fully dedicated the federal highway trust fund that maintains our crumbling infrastructure — for three months would cost $11 billion. McCain has not said how — or if — he would replace those revenues. [CAPAF, 4/15/08]

McCain’s Holiday Sends More Money ‘Out Of Our Economy Immediately.’ The Wall Street Journal notes “Many economists have also questioned the wisdom of suspending or cutting gas taxes; doing so, they say, simply stimulates more consumption of gasoline.” In McCain’s own words, that increased consumption would send more money “out of our economy immediately” to oil-producing countries, “unfortunately, to fund terrorist organizations.” [WSJ, 4/15/08]

Cutting Transportation Investment Kills Jobs. The Wall Street Journal asked: “Relief — or fewer jobs? According to a white paper circulated on Capitol Hill last week by the U.S. Transportation Department, every $1 billion of federal highway investment supports 34,779 jobs.” McCain’s plan could put over 300,000 workers on an unpaid “holiday.” [WSJ, 4/15/08]

McCain’s Holiday Threatens ‘Fundamental Fiscal Underpinnings.’ McCain spokesman Brian Rogers said “general revenue transfers” would pay for the “holiday” — increasing the budget deficit by $11 billion. As Matthew Jeanneret, a spokesman for the American Road & Transportation Builders Association, says: “It might be good politics. But it is shortsighted, and it won’t do anything to stimulate the economy.” [MSNBC, 4/15/08]

McCain’s plan would push gas prices up and force policymakers to choose between killing jobs and infrastructure investment or blowing up the budget.