McCain's Gas Tax Holiday Runs Contrary to Other Positions
John McCain's economic adviser believes in price signals.
Douglas Holtz-Eakin spoke approvingly during a conference call Tuesday about how the Safeway supermarket chain lowered its health care costs by sending a strong price signal to employees. In order to encourage workers to take advantage of preventive care, Safeway made it free. No co-pays. No deductibles, for things like smoking cessation and nutrition courses.
Just as lowering prices helps to encourage healthy behavior, raising prices (with a cigarette tax, for example, or higher health insurance premiums for smokers) can help discourage unhealthy behavior.
"There's a good role for public awareness of what contributes to the problem," Holtz-Eakin said.
That's what prices do.
So it's a little puzzling that McCain wants to interfere with the price signal energy markets have been sending.
Since the beginning of the year, the price of crude oil has risen about $20 per barrel. And the price of gasoline has jumped about 50 cents a gallon.
Motorists got the message. According to the Energy Department, demand for gasoline fell more than 6% between January and February, and demand for all finished petroleum products dropped 8.5%.
Instead of simply allowing those market forces to keep working, McCain has proposed lifting the federal gasoline tax during the busy summer driving season from Memorial Day to Labor Day. And now Hillary Clinton has agreed.
Americans are addicted to oil, much of it imported. As McCain himself points out, this contributes to our trade deficit and some of the money we send overseas for oil goes to people who don't have the United States' best interests at heart.
The long term solutions to this are greater fuel efficiency and alternative fuels. The short term solution is to drive less.
So what kind of signal does McCain's proposed lifting of the gas tax send?
-- Scott Horsley
10:51 AM ET | 04-30-2008 | permalink
