Regular gas was $3.55 a gallon here in southeastern Ohio yesterday.
Many people I know are curbing their summer travel plans. They’re even doing more planning when it comes to everyday errands, combining them so as not to waste gas.
This, of course, as average fuel prices climb, is happening across the country and the three leading presidential candidates have noticed. They’ve also noticed that the big oil companies are reporting record profits.
First, Senator John McCain and now, Senator Hillary Clinton have said that they want to give US drivers some relief at the pump. They would both suspend the federal gasoline tax during the summer driving season. Senator Barack Obama has opposed the idea.
Obama has, in effect, put himself in the position of opposing a tax reduction.
That can be a dangerous stance to take. Early in the administration of George W. Bush, the President proposed tax cuts. Supply side economics insisted that if the federal government reduced Americans’ tax burdens, the economy would be stimulated and overall federal revenues would increase as a result of increased investment in the economy and greater personal income. The Bush tax cuts went into effect, but in the Senate, two members of the President’s Republican party opposed the plan: Lincoln Chafee of Rhode Island and John McCain of Arizona. At the time, McCain argued that reductions in taxes ought to be matched by reductions in spending.
McCain’s classic conservative position didn’t match the new conservative orthodoxy however, an orthodoxy which I think, results from a misreading of the Reagan years. Reagan, you’ll remember, got Congress to pass tax cuts as well. At the same time, Congress went along with massive increases in Defense Department outlays, endorsing the Reagan policy of trying to bring down “the evil empire” by forcing the Soviet Union into an arms and spending race that, it was thought, would bring the Soviets to their senses or to their knees. The Soviet Union collapsed, I believe, under the weight of the moral and fiscal bankruptcy of communism and because of a combination of the policy of containment in place from 1945 on in the US and the stupid decisions of the Moscow regime, the stupidest of which being the war in Afghanistan, where Muslim zealots like Osama bin Laden fought a guerilla war of attrititon designed to bleed the Soviets of people and money.
But Reagan insiders and apologists like Peter Robinson–whose book, How Ronald Reagan Changed My Life is excellent, by the way–conclude that in the end, budget deficits don’t matter. I doubt that Reagan himself, a stalwart opponent of deficits for decades, would draw the same conclusion, seeing the deficits his administration ran as temporary, and regrettable, expedients, necessary in the face-off with the Soviet Union, essential to causing the Soviets to reduce their nuclear stockpile.
McCain’s initial refusal to support the Bush tax cuts has won him a world of hostility from believers in the new conservative orthodoxy.
It’s not the first time I’ve seen pols get skewered for being on the “wrong side” of an argument over taxes. In 1988, for example, George H.W. Bush famously pledged in his GOP nomination acceptance speech, that he would accept “no new taxes” in dealing with the alarming Reagan budget deficit. When, several years later, Bush, in negotiations with the Democratic Congress, felt compelled to accept some tax increases, it had the effect of both hurting him among conservatives and the country at large, much of which remembered his pledge and concluded his word was less than trustworthy.
Here in Ohio, Democratic governor John Gilligan came to office in 1971, succeeding James Rhodes, arguably the best governor in Ohio history. Riffing off of the post-World War 2 boom during his first set of terms as Ohio chief executive from 1963 to 1971, Rhodes was guided by several ideas. First, make the state a good place to do business by building highways, vocational schools, better public universities and colleges, an airport in every county and so on. Rhodes was fond of saying, “Profit isn’t a dirty word in Ohio.” Second, lower taxes.
One result of Rhodes’ tenure was huge budget shortfalls. Gilligan decided to deal with them by introducting, for the first time, a state income tax. He also introduced an austerity program. Gilligan got booted out of office in 1974, losing his bid for re-election to Rhodes, his predecessor, elected for an unprecedented set of two more terms.
Taxes are, in some ways, the real third rail of US politics. After all, this is a country which was in part, galvanized for revolution by the motto, “No taxation without representation.” Through the centuries, more than a few US pols have built their careers around a variation of that motto, seeming to say, “No taxation.” Those who disagree have a tough time making their contrary arguments heard.
It can be politically fatal to oppose tax decreases or to support tax increases. John McCain knows this well. His opposition to the tax cuts of Bush the younger has been one of a litany of reasons offered by neocons for not backing him for President.
Whether Obama is right or wrong in opposing this summer time vacation from the gas tax, I don’t know. As readers of my blog posts know, I don’t get into endorsing policies or candidates anyway. But, one week before the Indiana and North Carolina primaries, he is taking a politically risky position. In the face of voter concern and anger over high prices at the pump, he’s offering a somewhat subtle and nuanced argument, one predicated on long-range thinking, always dangerous in the heat of a political campaign.
Today’s New York Times reports:
Mr. Obama derided the McCain-Clinton idea of a federal tax holiday as a “short-term, quick-fix” proposal that would do more harm than good, and said the money, which is earmarked for the federal highway trust fund, is badly needed to maintain the nation’s roads and bridges…
At a meeting with voters in North Carolina on Monday, Mr. Obama said lifting the gas tax for three months would save the average consumer no more than $30, a figure confirmed by Congressional analysts. Mr. Obama has previously dismissed Mr. McCain’s proposal as a “scheme.”
“Half a tank of gas,” Mr. Obama told his audience. “That’s his big solution.”
Both Senators Clinton and McCain are pressing their cases for a temporary gas tax reduction insistently. Few politicians are unrewarded at the polls for promoting tax reductions, even of the temporary variety. McCain has the scars to prove it. If Clinton can get voters in Indiana and North Carolina aware of her plan and Obama’s opposition to it, she may be able to continue her fight for the Democratic nomination one more week.
[This is being cross-posted at my personal blog.]