Energy -- Gas Tax Holiday Is A Bad Idea

May 1, 2008

by Faiz Shakir, Amanda Terkel, Satyam Khanna, Matt Corley, Ali Frick, Benjamin Armbruster, and Brad Johnson

ENERGY

Gas Tax Holiday Is A Bad Idea

Rising gas prices are hitting Americans hard, while oil companies rake in record profits. As the economy falters, calls to deal with the price of gasoline have reached the halls of Washington, D.C. "[L]awmakers are considering ideas they might have nixed months ago, including temporarily lifting the federal gas tax and halting deposits of oil into the Strategic Petroleum Reserve." Sens. John McCain (R-AZ) and Hillary Clinton (D-NY) have called for a summer moratorium on the federal gas tax. McCain has not specified how to make up the $11 billion; Clinton has proposed a tax on windfall profits from oil companies to recoup losses to the federal highway fund. Economic analysts of all stripes have responded with horror, pointing out that "the benefits will flow to oil companies, not consumers." Even if a suspension of the gas tax led to lower prices, the rich would benefit the most, since "the more a family earns, the more they drive," notes Sam Davis of the Center for American Progress. Len Burman of the non partisan Urban Institute calls the proposal "a huge windfall for refiners." New York Times columnist Tom Friedman argues, "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." Newsweek's Jonathan Alter agrees, stating, "Suspending the federal gas tax is a crass ploy for votes." The Atlantic Monthly's James Fallows calls cutting the gas tax "destructive nuttiness" and "embarrassing." Economist Gilbert Metcalf called it "very short-sighted," noting, "If we want people to invest in energy-saving cars, we need some assurance that the higher price paid for these cars is going to pay off through fuel savings."

WHAT'S TO BLAME FOR HIGH GAS PRICES: President Bush said Tuesday that he has no "magic wand" to affect gas prices. But as Steve Hargreaves of CNNMoneywrites, gas price is "all about government policy." Since the United States has some of the lowest gas taxes in the world, the price at the pump is dominated by the cost of oil. In congressional testimony one month ago, Exxon Mobil senior vice president Stephen Simon said his company believes the price of oil involves four components. The effects of supply and demand accounts for "somewhere around $50-55 a barrel," or about half the current price. The second factor is the weaker dollar; since 2001, "the dollar has lost 45% of its value" against the euro. The third is "geopolitical risk"; since 2003, the United States has been committed to a three-trillion-dollar war in Iraq, the heart of the turbulent oil-producing world. And the final component is "speculation"; investors have "looked to commodities not only as a hedge against inflation but as a hedge against the tumbling greenback."

IMMEDIATE ACTION: When asked by Reuters abot the gas tax proposal, conservative economist Greg Mankiw recommended, "If you want to provide households tax relief, a direct rebate...is more effective." Center for American Progress analysts Sam Davis and Daniel J. Weiss describe how a fast-acting "reliefbate" plan would work. Applied progressively, the "reliefbate" would provide reprieve to 80 percent of American households as well as all independent truckers, at a total cost of $23.2 billion, which "could easily be paid for by closing several oil tax loopholes and recovering lost royalties." The Washington Post's Dan Froomkin further recognizes that there are "two hugely significant factors" that Bush could take action on immediately: "the war in Iraq and the value of the dollar."

LONG-TERM SOLUTIONS: The fundamental solution to gas prices is to reduce dependence on oil. As conservative economist Douglas Holtz-Eakin said, "You have to price oil on a permanent basis to provide incentives to shift away from it. It's the key issue -- and the hardest one to make progress on." This year, the National Surface Transportation Policy and Revenue Study Commission submitted a comprehensive plan for the future of the transportation infrastructure, which fuel taxes fund. But the federal fuel tax is but one brushstroke in a much broader picture. The Center for American Progress's Energy Opportunity Agenda states, "The realities of global warming and our growing dependence on oil, much of it imported, will make energy more pivotal than ever to our economic, environmental, and national security fortunes in the 21st century. The challenge we face is nothing short of the conversion of an economy sustained by high-carbon energy -- putting both our national security and the health of our planet at serious risk -- to one based on low-carbon, sustainable sources of energy. The scale of this undertaking is immense and its potential enormous."

IRAQ -- FIVE YEARS AFTER 'MISSION ACCOMPLISHED,' WHITE HOUSE TRIES TO REWRITE HISTORY: Five years ago, on May 1, 2003, in what The New York Times that day called "a powerful, Reaganesque finale to a six-week war," President Bush landed aboard the U.S.S. Lincoln, stood under a banner proclaiming "Mission Accomplished," and declared, "major combat operations in Iraq have ended." Since that day, more than 3,900 U.S. soldiers have died in Iraq, representing more than 97 percent of total troop deaths there. Yesterday, White House Press Secretary Dana Perino said Bush was "well aware" that the banner "should have been much more specific," suggesting it should have read "Mission Accomplished For These Sailors Who Are On This Ship On Their Mission." Last year, Perino insisted that "we did prevail" in Iraq, while former press secretary Tony Snow claimed Bush "said just the opposite" of "mission accomplished." But Bush's meaning was quite clear, considering that one month after that May 2003 declaration, he told a group of soldiers in Qatar, "America sent you on a mission to remove a grave threat and to liberate an oppressed people, and that mission has been accomplished."

MILITARY -- PENTAGON ESTABLISHES FOREIGN LANGUAGE 'NEWS' WEBSITES TO PROMOTE U.S. INTERESTS: The Defense Department is delving deeper into the "news" business, "setting up a global network of foreign-language news websites, including an Arabic site for Iraqis, and hiring local journalists to write current events stories and other content that promote U.S. interests and counter insurgent messages." USA Today reports that "[n]either the initiative nor the Iraqi site, www.Mawtani.com, has been disclosed publicly," and"[a]t first glance" sites like Mawtani.com look like conventional news websites. Only by clicking on the "about" link can the reader learn that the site is sponsored by the Pentagon. Journalism groups "say the sites are deceptive and easily could be mistaken for independent news." Local journalists are hired to write stories to promote U.S. aims while "[m]ilitary personnel or contractors review the stories to ensure they are consistent with those goals." While the Pentagon has previously "paid for the placement of favorable stories in the Iraqi press," The New York Times recently revealed that the Defense Department has also used a group of "military analysts" in a "campaign to generate favorable news coverage of the administration's wartime performance."

ADMINISTRATION -- CHENEY BLOCKS PROTECTIONS FOR ENDANGERED WHALE: The North Atlantic right whale, whose "population numbers fewer than 400," is one of the most endangered species on Earth. Four years ago, the National Marine Fisheries Service (NMFS) started a rule-making process to protect the whale, and last February, the National Oceanic and Atmospheric Administration (NOAA) issued a ruling that ships traveling through parts of East Coast waters had to slow to "10 knots or less during parts of the year to protect the right whales." The White House, on the other hand, is undermining these efforts. According to a letter sent by House Oversight Committee Chairman Henry Waxman (D-CA), the White House Council of Economic Advisers and Vice President Cheney's office have blocked the NOAA ruling "for more than a year." Cheney is blocking protection of the whale because he questions "whether reducing the speed of large ships will help save the whales." In the past year, "at least three right whales have died from ship strikes."

The Justice Department agreed yesterday "to show the Senate and House Intelligence Committees secret…legal opinions justifying harsh interrogation techniques that critics call torture." In a Senate hearing, a department spokesman said "that the administration believed that the president could ignore or modify existing executive orders" on interrogation techniques "without disclosing the new interpretation."

The Justice Department said yesterday that the "Foreign Intelligence Surveillance Court approved 2,370 warrants last year targeting people in the United States believed to be linked to international terror organizations," which amounted to "a record number of requests." "The number of warrants has more than doubled since the terrorist attacks of 2001."

Blackwater Worldwide "is seeking outside investors to increase its financial position, a move that comes even as it fends off criticism over its tactics in protecting diplomats in Iraq and elsewhere." In April, "the State Department said it was going ahead with another one-year contract that continues Blackwater’s work into 2009."

Interior Secretary Dick Kempthorne proposed yesterday allowing people to carry concealed weapons in some national parks and wildlife refuges, a rule that would "overturn a 25-year-old regulation that has restricted loaded guns" in these areas.

Auto loan delinquency in the United States "hit a 17-year high in the fourth quarter of 2007, according to the American Bankers Association. Some 3.13 percent of car loans were overdue 30 days or more." Edmunds.com, which provides automotive information, estimates that "nearly a fourth of borrowers are 'upside down' in their car loans, meaning the car is worth less than the loan balance."

Speaking after touring Fort Bragg's 82nd Airborne Division barracks yesterday, Army Secretary Pete Geren called the poor condition of the barracks "unacceptable." Geren added that "improvements are coming, but some of the problems can't be fixed quickly."

A lawyer representing veterans' groups asked a federal judge yesterday "to order the government to provide better mental health care" for veterans. Noting that "18 U.S. veterans commit suicide every day," Arturo Gonzalez told the judge, "The system, your honor, has crashed, it has been overwhelmed," adding, "more of these veterans are dying in the United States than out in combat. That is wrong."

And finally: For the 19th time, Rep. Bart Gordon (D-TN) has nabbed the title of "fastest man in Congress," in the annual ACLI Capital Challenge three-mile race. "Nineteen wins in 19 tries seems pretty good for an old guy," said Gordon's spokeswoman. Rep. Jean Schmidt (R-OH) also once again won "fastest woman in Congress." Rep. Pete Sessions (R-TX) won the prize for being "dead last," coming in behind 76-year old Sen. Dick Lugar (R-IN). But Sessions, an "accomplished long-distance runner," had to walk instead of run the race, on doctor's orders.

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"The Senate unanimously approved legislation yesterday to ensure that tight credit markets don't impede students' ability to obtain college loans." The bill would "increase limits on the amount borrowers can receive in federally subsidized student loans."

MISSOURI: Supporters of a ballot measure banning affirmative action are accused of using misleading tactics.

MASSACHUSETTS: Massachusetts's economy "expanded at a healthy clip in the first three months of the year despite a national economic slowdown."

FLORIDA: Bill requiring ultrasounds before all Florida abortions fails.

THINK PROGRESS: Former employee says KBR promoted camp manager after she was caught stealing.

WONK ROOM: The Office of Management and Budget calls its interference with Environmental Protection Agency regulation of cancer agents "sound science."

VET VOICE: "Experts" on Iraq were wrong: casualties reach seven-month high.

GLENN GREENWALD: NBC's Brian Williams defends media silence over The New York Times' Pentagon propaganda expose.

"We didn't invade Iraq."
-- Fox News's Bill O'Reilly, 4/29/08

VERSUS

"I'll submit that most folks still have no idea why the Bush administration invaded Iraq."
-- O'Reilly, 1/28/08

Think Progress

Gas Tax Holiday Is A Bad Idea

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