Debating Myself

Update: Just found out that Obama supported gas tax holidays too, although it was during his time in the Illinois state senate. Thanks to Buck Naked Politics for the info!

Just as Hillary Clinton is beginning to rise in the national polls thanks to a surge of momentum from her win in Pennsylvania she manages, like so many times before this campaign season, to shoot herself in the foot.

People may not be outraged about it, and it may not stir emotions like Obama’s current problems with Rev. Jeremiah Wright, but her recent proposal for a gas-tax holiday this summer (also proposed by John McCain–you might know him) has stirred up more than a little controversy. Top Democrats, like the Majority Leader in the House, have even lined up against the idea. Obama is enjoying telling voters that Hillary’s proposal will cost the government millions and save taxpayers only about $30 each.

Hillary’s side of the story seems to make sense at first, and I’m sure her campaign thought reasoning like what Buck Naked Politics’ D. Cupples summarizes here, would be very persuasive to middle class voters pinched by gas prices right now.

There’s just one problem: it won’t work.

Paul Krugman, the New York Times columnist, takes Hillary’s proposal to task in a recent article. The Washington Post’s Fact Checker has a great in-depth analysis of the economics behind the issue. If you take my word for it, here it is short and sweet: lower price = more demand and more demand will lead right back to higher prices because supply cannot be expanded. There simply isn’t enough oil.

The Machiavellian argument that Hillary knows it won’t be that effective, but it will win her more votes is okay with me, I support her and would like to see her win. But, that argument appears to fail as well. Fact Checker tell us that when a similar policy was tried in Illinois:

A poll by the Chicago Tribune showed that only 28 percent of motorists believed that they were actually paying less for gas as a result of the temporary suspension of the tax.

Not a significant enough part of the electorate to make a difference.

Across the Aisle features a great article by Brian Vogt discussing Hillary’s proposal and then suggesting some more sensible ways to deal with the gas price problems facing America. Essentially, inflate your tires properly (which will improve fuel efficiency by up to 10%) and let the government and private industry develop some long-term technological solutions that will reduce our dependency.

I agree, but I would argue that fixing the dollar crunch and managing the economy better to preserve consumers’ purchasing power would also go a long way to fixing this problem as well. A large rise in oil prices can be directly attributed to the falling dollar.

There is one aspect of Hillary’s proposal that people aren’t discussing that troubled me greatly (and Obama agrees with Hillary here). Again, from Buck Naked Politics:

That’s why I have called for making Exxon and other oil companies with record profits pay the federal gas tax this summer… I believe we should impose a windfall profits tax on big oil companies and use that money to suspend the gas tax and give families relief at the pump.

Now maybe it is just me, but windfall profits taxes always make me nervous. Sure, Exxon alone made over $40 billion in profits last year, but the market determines the price of gasoline, not Exxon. Exxon is simply the beneficiary of rising oil prices and the success of the OPEC cartel.

Here are some arguments against a windfall tax. My favorite:

The Tax Foundation’s Jonathon Williams and Scott Hodge remind us of more very unintended consequences:

… according to the Congressional Research Service (CRS), is that the 1980s windfall profits tax depressed the domestic production and extraction industry and furthered our dependence on foreign sources of oil.

So here’s to Hillary proposing two policies that in all likelihood will sacrifice meager short-term relief ($30 over 3 months) in exchange for:

• A high likelihood of rising prices later
• Decreased oil production
• Weakened support for alternative technologies (in the short and middle term)
• Further dependence on OPEC oil
• No additional political support

I’ll keep my $30 Hillary (maybe even donate it to your campaign so you can hire a new economic adviser). Let’s try to find a more creative solution. I know you can, and have, done much better. As Paul Krugman writes:

I don’t regard this as a major issue. It’s a one-time thing, not a matter of principle, especially because everyone knows the gas-tax holiday isn’t actually going to happen. Health care reform, on the other hand, could happen, and is very much a long-term issue — so poisoning the well by in effect running against universality, as Obama has, is a much more serious breach.

Barack Obama’s campaign is now a media darling and a populist movement across the country. Much has been touted of his ability to unify people from across the political aisle by reaching out to independents, moderate Republicans, and Democrats from all walks of life. But where exactly does Obama stand? Is Obama capable of delivering on his ambitious campaign promise to unite the country again? About eight years ago we had another presidential candidate promising some similar things—will history repeat itself?

One way to evaluate Obama’s ability to unite a divided electorate is to look at his policy preferences during his short time in office. The National Journal, a political weekly based in Washington D.C., conducts annual reviews of the voting records of legislator’s and rates them as either liberal or conservative. (For a more in-depth description of the methodology, look here. For a description of the “key votes” used in compiling the ratings, look here.) Obama, the Democratic front-runner and darling of independent voters, ranked as the most liberal senator in 2007. In the interest of fairness, it should be noted that Hillary Clinton was not far behind, ranking 16th in a notable shift to the left in 2007.

Interestingly, soon-to-be Republican nominee John McCain did not vote frequently enough to be included in this study, but a composite of his votes on social policy (including immigration) gave him with a much more centrist score than either Hillary Clinton or Barack Obama. A PDF file of McCain’s prior scores compiled by the National Journal can be found here—showing the continued shift toward the senator throughout McCain’s career.

Below is a table summarizing the data collected by the National Journal on all three candidates. McCain’s scores are on a 100 point scale of conservatism (100 being extremely conservative, 0 being not conservative) and the two Democratic contenders are scored on a corresponding scale of liberalism. Again, see the excellent description of the methodologies for specific details of the study.

While the Democrats are riding a wave of momentum into the general election, regardless of the outcome of the primaries, independent and moderate voters may want to look more closely at the voting records of the various candidates before deciding who will best represent their voice in the Oval Office. Though Obama, and Hillary as well, may be flashier campaigners and much more accomplished speakers and debaters than McCain, neither Democratic senator can match the public record that McCain has accumulated over the years. And neither can claim to be more moderate than him in anything other than rhetoric.

UPDATE: New poll results show that Obama’s appeal is ever broadening. Is this proof that rhetoric matters more than record? Or is it evidence that Americans want to vote for a candidate that moves them, that they believe in instead of a career politicians? This campaign is providing a really interesting look into the psyche of the American electorate—something to watch as the campaign season marches on. Keep watching.