Political Physics: McCain’s Gas Math
A blogumn by Monique King-Viehland
Clear-headed political analysis while everyone else is yelling and screaming
McCain Gas Tax Plan – Is that $28 Worth it?
On Saturday I drove to an event in NYC at the Times Center entitled, “Women, Wisdom & You” (it was fantastic, in case you were wondering). Now, if you know me, then you know I live in Trenton, NJ, so your first thought may be why didn’t I just take the train? Let’s just forgive me for my extreme lack of green thinking on that day and try not to let it cloud your view in relationship to the rest of the article.
On the way back from the city I had to stop and get gas. I handed my credit card to the nice attendant (yes in NJ they still pump your gas for you) and watched the ticker keep going up as he filled my tank. Now you should know I don’t drive an SUV, so it was painful to watch as the ticker went from 20.00 to 30.00 and then finally settled on $48.53. I live less than 15 minutes away from my job, my husband, Brian, works from home and we have a new baby so we rarely go anywhere these days, yet we still average $300 a month for gas.
So you’d think I would be jumping up and down at the thought of suspending the federal gas tax for any amount of time, right?
Several months ago, McCain proposed suspending the 18.4-cent tax on gasoline (and the 24.4-cent levy on diesel fuel) from Memorial Day until Labor Day. His announcement came as crude oil futures hit a record $113.93 a barrel and the average price of gasoline stood at $3.38 a gallon. “The effect [would] be an immediate economic stimulus – taking a few dollars off the price of a tank of gas every time a family, a farmer, or trucker stops to fill up,” McCain said during a speech in which he laid out his economic policy. “And because the cost of gas affects the price of food, packaging, and just about everything else, these immediate steps will help to spread relief across the American economy.” Now McCain says that he is contemplating adding suspension of the gas tax as a cornerstone of his long-term economic policy.
The national average for a gallon of gas is $3.69. Economists say that cutting the cost by 18 cents amounts to a 5% reduction. The American Association of State Highway and Transportation Officials said the average American would only save $28 a year under McCain’s proposal.
Conversely, the gas tax supports the Federal Highway Trust Fund, which finances road projects nationwide and is already facing a $3.4 billion shortfall. The American Society of Civil Engineers says every dollar invested in highway infrastructure generates $5.40 in economic benefits through reduced delays, improved safety and lower vehicle operating costs. And the federal transportation department says every $1 billion in highway spending creates 34,779 jobs.
So using that math, McCain’s proposal would cost the government approximately $9 billion dollars and more than 300,000 jobs.
When Barack Obama was in the Illinois State Legislature, he voted for a bill to suspend the state gas tax. What happened? A 5% reduction in the gas tax only yielded a 3% reduction in gas prices. And, Illinois drivers actually purchased more gas. Obama, partly because of his experience in Illinois, opposes any suspension of the federal tax – temporary or permanent.
Listen, I am not saying that 3% is nothing to sneeze at, especially in this economy where every dollar counts. But in the greater scheme of things, from now on, I’ll just take the train into the City and maybe you should too.