The losers: You, me, and infrastructure
A terrible idea that failed Bob Dole 12 years ago, gained second life as a recent John McCain economic proposal, and then became (perhaps surprisingly) a recent centerpiece of Hillary Clinton’s platform, is leading the daily news from the campaign trail as Americans feel tightening pressure from rising gas prices.
A proposal that sounds noble and caring in soundbyte form, will not only result in relatively small relief at the pump, but most importantly, it will cut off funding to the Highway Trust Fund and infrastructure funding for 15 weeks, at a loss of roughly $9 billion, according to estimates. In case you’ve forgotten, as it stands now, the Fund is due to run out of money in a short period of time. (Has it been so long that we’ve forgotten the Minnesota I-35 bridge collapse?)
Currently, Barack Obama is the only candidate who is opposing the gas tax holiday, generally saying that the costs far outweigh the miniscule benefits for average Americans. In one of the rare departures on a major policy from Hillary Clinton, Obama is pointing out how rising gas prices should be driving us towards innovation and alternatives that can help us consume less oil — rather than more. (To be fair, Hillary Clinton does want to replace the gas tax funding with a huge tax on oil companies — of which the chances for passage in Congress are dubious at best.)
The Huffington Post tried to find an economic expert or policy wonk who could say that this was a smart policy. After failing to find one, the HP concluded — and was told by her campaign — that “she doesn’t need to listen to the experts.”
A better option
As Rep. Earl Blumenauer likes to point out, 1/3 of our air travel is for trips that are 350 miles or less. Via Greater Greater Washington, we get this quote from Obama talking to a couple in Indiana this week about a much more viable solution for saving fuel on trips of that length: Intercity Rail.
The irony is with the gas prices what they are, we should be expanding rail service. One of the things I have been talking about for awhile is high speed rail connecting all of these Midwest cities—Indianapolis, Chicago, Milwaukee, Detroit, St. Louis. They are not that far away from each other. Because of how big of a hassle airlines are now, there are a lot of people if they had the choice, it takes you just about as much time if you had high speed rail to go the airport, park, take your shoes off.
This is something that we should be talking about a lot more. We are going to be having a lot of conversations this summer about gas prices. And it is a perfect time to start talk about why we don’t have better rail service. We are the only advanced country in the world that doesn’t have high speed rail. We just don’t’ have it. And it works on the Northeast corridor. They would rather go from New York to Washington by train than they would by plane. It is a lot more reliable and it is a good way for us to start reducing how much gas we are using. It is a good story to tell.
“This is not an energy policy, it’s money laundering”
Thomas Friedman took the opportunity to excoriate the policy and its supporters in his New York Times column earlier this week:
It is great to see that we finally have some national unity on energy policy. Unfortunately, the unifying idea is so ridiculous, so unworthy of the people aspiring to lead our nation, it takes your breath away. Hillary Clinton has decided to line up with John McCain in pushing to suspend the federal excise tax on gasoline, 18.4 cents a gallon, for this summer’s travel season. This is not an energy policy. This is money laundering: we borrow money from China and ship it to Saudi Arabia and take a little cut for ourselves as it goes through our gas tanks. What a way to build our country.
When the summer is over, we will have increased our debt to China, increased our transfer of wealth to Saudi Arabia and increased our contribution to global warming for our kids to inherit.
No, no, no, we’ll just get the money by taxing Big Oil, says Mrs. Clinton. Even if you could do that, what a terrible way to spend precious tax dollars — burning it up on the way to the beach rather than on innovation?
In what could be the irony of ironies, a story on Bloomberg.com quotes several experts who think that gas prices will merely rise back up to their current levels — people are used to paying them after all — ensuring that that money goes into the pockets of oil companies, instead of into the common good of infrastructure:
The trouble with the plan, they say, is that oil prices are rising because of low supplies, and companies will continue to charge the average $3.60 a gallon and just pocket the money that would have gone to federal taxes. `That’s $10 billion, and it’s going into the pockets of oil refiners,” said Leonard Burman of the Tax Policy Center in Washington. “The last time I checked, they didn’t need it.”
So how much would we save?
Via Streetsblog, we get a link to Jabberwonk, where they posted a calculator to help you estimate just how much money you would save this summer based on gas mileage and how much you plan to drive. As you can see from the sample I did for a pretty average amount of driving (1,000 miles a month) on a 25 mpg car, the savings are not going to provide much relief for a family that is struggling to pay their mortgage. (savings of $27.60 over 15 weeks in this case.)
Economic experts and commentators agree that encouraging more driving at a time when oil demand is outstripping supply, jeopardizing our already insufficient infrastructure funding stream to provide consumers with a few extra bucks is bad, short-sighted policy.