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2 Fuel tax cut running on
empty By Julian Delasantellis
There's a serious conversation going on at
an American pediatrician's office.
"Mr and
Mrs Smith, we have a dangerous situation
developing with your four-year-old son, Travis
Billy Ray. He already weighs almost 50 kilograms,
and is showing all the signs of incipient Type 2
Diabetes, almost unheard of for a child of this
age. Also, I note that most of his teeth are
already rotted away with deep cavities. I think
that, at the very least, we're going to have to
make significant changes to his lifestyle,
particularly his diet."
Travis Billy Ray's
parents are at first disheartened and worried at
the news, but then, with recent developments in
the 2008 US
presidential election as
a guide and an inspiration, they know precisely
what to do. "Let's get him a case of candy bars!"
It's time for another US presidential
election, and, in contrast to what might have been
considered the major issues and controversies that
will be faced by the next chief executive of the
world's lone superpower, this time the attention
of the American voting public is totally consumed
on but two issues, the utterances of the Reverend
Jeremiah Wright, Illinois Senator Barack Obama's
voluble former pastor, and gas prices.
Wright and gas prices, gas prices and
Wright, they are the unending current themes in
the American media. I'm sure that Fox news will
soon conflate the perfidy of the two by producing
video footage of Wright on a ladder raising the
prices on a gas station's signboards.
In
recent times the spectacle of gasoline consumers
taking it on the chin has now become a fairly
traditional right of spring's passage; this year's
running of the gas pumps is unique only in the
record extent to which it has reached. Regular
gasoline is now approaching the US$4 per gallon
(or about $1.05/liter) mark in much of the
country.
I noted in two Asia Times Online
articles last year (Crude oil: Barrels of fun to crack
you up, April 4, and Why oil chiefs are feelin'
groovy, April 24) I noted how last
spring's price boosts were not the result of
actions by the Organization of Petroleum Exporting
Countries (OPEC) but were more due to a
sophisticated market manipulation conducted by the
world's, and particularly American, corporate oil
interests in keeping gasoline production down.
This year's price appreciation dynamic is
following a different course that I will explore
in a later article, but, as for now, let's just
say that the oil interests have found a new way to
pull the rabbit from out of the magician's hat,
and they're whaling away on that poor leporid's
ears until they're raw and bloody.
The
American public is up in arms over this latest
round of gas pump extortion; you know things have
to be pretty serious when the morning news shows
cover gas prices before they move on to their all
day coverage of Paula Abdul's latest emotional
disintegration on American Idol. They look
to their political leaders, their president, their
representatives and presidential candidates, "you
know, those people in Washington" for assistance.
This leaves the political system in a deep
quandary. On the one hand, the nation's leaders
could initiate a serious conversation with the
populace about the extent of America's dependence
on scarce petroleum, and how the world's limited
supplies of such are increasingly being sought by
such newly energy thirsty countries such as China
and India.
Then again, in choosing between
seriously discussing or demagoguing an issue, the
latter always works so much better. Why not keep a
good thing going?
Therefore, it should not
be that surprising that two of the nation's three
current presidential candidates, Republican
Senator John McCain of Arizona, and Democratic
Senator Hillary Clinton of New York, have advanced
proposals precisely along these lines.
McCain initiated the discussion by
advocating suspension of the Federal government's
excise tax on gasoline sales, currently at 18.4
cents a gallon for gasoline and 24.4 cents for
diesel, for the upcoming few months, what is
called the "summer driving season" (as if
Americans bicycle or cross-country ski to work and
school the rest of the year). The once patrician
Clinton, a woman now so committed to identifying
with the American working class that she will
undoubtedly soon be photographed ripping lug nuts
off pickup trucks with her teeth, pandered along
faithfully in tandem.
Domestic axis of
evil As that the Federal gas tax contains
the word "tax" in it, the entire concept qualifies
in the conservative lexicon as belonging to sort
of a domestic axis of evil, but, in reality, the
charge is more a straight user fee than a tax.
Over 80% of gas tax revenues are collected in what
is called the Highway Trust Fund, which finances
repair, reconstruction and maintenance of the
nation's highway, bridge, and other road
transportation infrastructure systems.
Therefore, the more you drive, the more
you use the highways, the more tax on gasoline you
pay for their upkeep. (This is also the thinking
behind the higher taxes on diesel fuel, since
heavy trucks inflict far more wear and tear on the
highways than do passenger cars.)
A
perennial bugaboo of suburban Republican lawmakers
is that about 15% of the revenue collected by the
gas tax goes to mostly urban mass transit, subway
and bus systems, which seemingly does not benefit
the suburbanite commuting the highways alone by
car; the proponents of mass transit argue that
every commuter on a federally financed bus or
subway train is one less car for Mr Commuter to
contend with on the highways.
Suspending
the Federal gas tax during the "summer driving
season", basically, from the American Memorial
Day, this year on May 26, to American Labor Day,
this year on September 1, will cost an estimated
$8.5 billion in gas tax revenues. As last summer's
collapse of an Interstate highway bridge over the
Mississippi River in Minneapolis proved, there is,
however plenty indication of a dire, immediate
need for these funds.
McCain has provided
no specifics on how to make up for the shortfall;
he has just said he will propose cuts in what are
called "earmarks", specific, local appropriations
in the budget inserted by individual lawmakers.
When pressed for more details on just which
"earmarks" would be cut, he falls back on his now
familiar response to requests for detailed
information on all his policy initiatives, that he
was a prisoner of war in North Vietnam for six
years during the Vietnam War.
As has been
her trademark in the campaign, Clinton has
provided specific details on how she will make up
the gas tax shortfall. According to her campaign
website, "Hillary will impose a windfall profits
tax on oil companies and use the money to
temporarily suspend the 18.4 cent per gallon
federal gas tax and the 24.4 cent per gallon
diesel tax during the upcoming peak summer driving
months."
All by herself, Clinton's mighty
hammer of justice is now so formidable that she
doesn't need the other votes in the senate, or in
the House of Representatives, to enact her iron
will into this law?
That's the rub of the
gas tax cut plans. Both the Clinton and McCain
summer gas tax holidays call for suspension of the
tax not in summer, 2009, when presumably one of
them might be the new occupant of the White House,
but for this summer, for this Memorial Day, now
less than three weeks away.
It's easy for
McCain to campaign against earmarks; most
representatives are against them, unless they are
targeted for that representative's individual
district - then they become crucial "constituent
services".
As an economist, I have no
objections to what is called the "windfall profits
tax", for all that would do is collect the excess
profit, what we call the "monopoly rent",
generated by oil companies through their working
oligopoly over the markets. Still, this new tax
hike on Big Oil would have to get by both the last
eight years' absolutely ferocious Cerberuses of
the interests of the oil business, President
George W Bush and Vice President Dick Cheney, and
the equally fearsome fangs of this businesses'
snarling watchdogs, both Republican and
Democratic, in the Congress. Even for a woman we
now know was the gun-toting Annie Oakley of both
the Wellesley College political science department
and Yale Law School, this would be a formidable
challenge in the time allotted.
Also, it
is important to note that lowering the gas tax
18.4 cents a gallon in no way guarantees a like,
or any reduction at all, in actual retail gas
prices. Any number of corporate oil interests
along the petroleum production and distribution
pipeline could decide to raise prices right back
to their old level in order to kick up their
profit margins. The oil company might take a
public relations hit on this for a while, but in
that case all that would have to be done would be
for it to produce another soft focus elevator
music themed public service TV ad showing an oil
company worker hugging a duck or something. That
always seems to work. The McCain campaign does
not even entertain the possibility that the oil
companies would boost prices in response to the
gas tax
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