McCAIN AND HILLARY WANT TO FOOL YOU WITH A FAKE GAS TAX HOLIDAY

We can dedicate these to the McCain campaign ploy all over the country

This morning I was inundated with e-mails about some kind of cockamamie Jimi Hendrix porn tape story in the NY Times. Even my baby sister called me and said, "I read about you in the Times today." No, no, no... It's some other Howie Klein in L.A. It isn't me. Yes, I had a quasi-friendship with Hendrix in the late 60s but not close enough for this kind of thing. And, sure, I've had my share of vices; but porn was never one of them. The other notable occurrence in my world this morning, before running off to the airport, was watching Bush' execrable and venal speech on the economy. It made me sick just seeing him still-- even with his approval ratings headed towards single digits-- just lying his ass off.... and with the same old lies that no one believes anymore. Except McCain. McCain either believes or is making believe he believes. But even Bush couldn't go along with McCain taking the Bush Economic Miracle to it's logical conclusion.

I tried coming up with a coherent post about it before catching my plane. I love the art work Lucas did based The Blind Leading the Blind but few minutes ago I found Krugman's column, Gas Tax Follies (same edition as the Hendrix case of mistaken identity). I respect Krugman a lot and I've been disturbed over the course of the last few months as he leaned heavily in the Hillary direction. What, I thought, could make him so blind? It looks like her signing on to a version of McCain's cynical summer gas holiday ploy has finally opened his eyes (a little tiny bit). He terms McCain proposal "a really bad idea" and notes that "Hillary Clinton is emulating him (but with a twist that makes her plan pointless rather than evil), and Barack Obama, to his credit, says no."

Why doesn’t cutting the gas tax this summer make sense? It’s Econ 101 tax incidence theory: if the supply of a good is more or less unresponsive to the price, the price to consumers will always rise until the quantity demanded falls to match the quantity supplied. Cut taxes, and all that happens is that the pretax price rises by the same amount. The McCain gas tax plan is a giveaway to oil companies, disguised as a gift to consumers.

Is the supply of gasoline really fixed? For this coming summer, it is. Refineries normally run flat out in the summer, the season of peak driving. Any elasticity in the supply comes earlier in the year, when refiners decide how much to put in inventories. The McCain/Clinton gas tax proposal comes too late for that. So it’s Econ 101: the tax cut really goes to the oil companies.

The Clinton twist is that she proposes paying for the revenue loss with an excess profits tax on oil companies. In one pocket, out the other. So it’s pointless, not evil. But it is pointless, and disappointing.

I happen to agree with Hillary on the excess profits tax. She's right and Krugman's wrong but Hillary, Krugman and everyone in Washington knows that that proposal will get through Congress and be signed by Bush on the same day that Bush has Cheney arrested for treason and sent to Guantanamo for enhanced questioning. Hillary is being deceptive and treating the voters like fools to even bring it up in the context of a summer gas price reduction. It's a cheap Inside the Beltway trick that shows that she and McCain are just opposite sides of the same worthless coin. In case you missed it last time: