Tuesday, May 06, 2008

Hillary's gas tax holiday: why she's really pushing it

First, I have to give Hillary Clinton credit for successfully hijacking the issue from John McCain and making herself get identified in the media as the most prominent proponent of it.

But yes, the gas tax holiday idea is economically stupid, not least because, as Harvard professor N. Gregory Mankiw said in this article: "What you learn in Economics 101 is that if producers can't produce much more, when you cut the tax on that good the tax is kept . . . by the suppliers and is not passed on to consumers". Cut the tax and the oil companies will continue to charge what the market can bear, which means they'll jack up the price so that it was exactly the same as it was before the tax was cut.

But it's not at all politically stupid once you figure out what the real goal is: it's not to reduce gas prices, it's to make Hillary Clinton more popular.

So the oil companies will raise their prices if the tax goes away? Then it's not Hillary Clinton's fault that the gas tax holiday hasn't reduced the price, it's the fault of the evil old oil companies for "denying hard-working Americans the relief of the Hillary Clinton[tm] gas tax holiday". The fact that such "denying of relief" is an economic inevitability must be carefully ignored, indeed must be actively suppressed. Hence you see Hillary painting all those pointing out the truth of what will happen as "elitists" who are "working against the interests of ordinary Americans".

The image she's aiming for is one of Hillary Clinton heroically sticking up for the little guy in the face of evil special interest groups that are putting profit before people. The actual result of the gas tax holiday is irrelevant to the effort of painting this image. Criticism of the results of the policy, while important to make, won't make the slightest difference in whether she pushes this idea or not. Indeed, they can be helpful in painting the picture she's trying to create if she can get the objectors identified with the evil special interest groups she's presenting herself as opposing. It's all about the image, not the policy.

What's really disturbing about this is such an image strategy depends very heavily not just on voters not being well-versed in how the gas tax holiday would actually play out, but on making a virtue of ignorance: people must not know what would actually happen and why. The ramifications of that are a little too disturbing for me to contemplate right now.

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