Gas Tax, Again

In his continuing campaign to demonize Hillary Clinton's advocacy of a "gas tax holiday" (once a windfall profits tax is approved), Barack Obama maintained on Meet The Press this past Sunday

This gas tax, which was first proposed by John McCain and then quickly adopted by Senator Clinton, is a classic Washington gimmick. It, it is a political response to a serious problem that we have neglected for decades.... Now, here's, here's the upshot. You're looking at suspending a gas tax for three months. The average driver would save 30 cents per day for a grand total of $28. That's assuming that the oil companies don't step in and raise prices by the same amount that the tax has been reduced. And, by the way, I have some experience on this because in Illinois we tried this when I was in the state legislature, and that's exactly what happened. The oil companies, the retailers were the ones who ended up benefiting.

Look carefully: Obama did not say "retailers ended up benefiting," or "it was primarily retailers who benefitted," or "most of the benefit went to retailers." No, he said "the retailers were the ones who ended up benefiting."

Now to the facts, courtesy of a 5/6/08 article by George Frost on salon.com. As an Illinois state senator, Obama voted for a temporary lifting of the gas tax three times but now calls it a mistake and is quoted as saying "I voted for it, and then six months later we took a look, and consumers had not benefited at all."

Frost refers to "the only scientific study done on the pass-through of the tax holiday savings to Illinois consumers (and those in Indiana, as well, whose citizens enjoyed a similar holiday)," when Illinois' 5% sales tax on gasoline was suspended from mid-2000 through the end of 2000. It was entitled "$2,00 Gas! Studying the Effects of a Gas Tax Moratorium" and was written by Joseph J. Doyle Jr. and Krislert Samphantharak for the National Bureau of Economic Research. They concluded "the suspension of the 5% sales tax led to decreases in retail prices of 3%compared to neighboring states. And when the tax was reinstated, retail prices rose by roughly 4%."

The cut, however small, in gasoline prices may have been facilitated because, as Obama told constituents, "gas retailers must post on each pump a statement that indicates that the state tax has been suspended and that this temporary elimination of the tax should be reflected in the price per gallon of gas." Placement of a similar advisory on gas pumps would be critical if there is a suspension of the federal gas tax, as suggested by McCain and, conditionally, by Clinton.

Obama's false assertion "the oil companies, the retailers, were the ones who ended up benefiting" smacks of a - dare I say it- "classic Washington gimmick," the old-style politics decried by Obama since his campaign began. Still, in Obama's favor, it does suggest that he might have been on to something when he preceded his remarks by explaining "you're right, Tim, this defines, I think, the difference between myself and Senator Clinton." Because, Barack, as John McCain's meandering statements. and now you, continually make clear, your opponent in this race to the nomination does not hold a patent on deviation from the facts.