A Federal Gas Tax Holiday is bunk. Worse than bunk, it's counter productive -- the economic equivalent of solving the obesity problem by making Twinkies, ho-hos, and deep-fried mars bars tax deductible. Some people might call that populism, but pandering is closer to the mark.
Consider the following: The federal government figures that the average American drives 15,000 miles,1 or about two thirds of the way around the circumference of the Earth, every year.2 Put another way that's about 41 miles a day: about a gallon and a half of gas by most sane standards. The federal tax on that gallon and a half is a whopping twenty-seven cents.3
Twenty-seven cents. Try not to spend it all in one place.
Even if the Tax Holiday were extended year-round the savings would be fairly paltry for the average American. Drivers of land zeppelins like the gas guzzling Hummer H2 would save just $276 dollars in taxes in a year-round holiday and about a quarter to a third of that over the summer month Tax Holiday under consideration.4 For most Americans the savings from the Gas Jubilee will come in under the 30 dollar mark: not even enough for a full tank of regular.5 Indeed the whole scheme stinks of a style of politics wherein the appearance of action and concern is more important than real leadership and viable solutions.
Apologists for the misguided plan call it "populism," and while it my be the first Republican endorsed policy in recent memory that is not overtly regressive, the tax holliday is less about supporting the people and more about manipulating them. It is a political deception: another right-wing tax cut and another extension of the failed Bush economic policy masquerading as election-year concern for the common man.
Taxes didn't get the United States into this economic mess; the Republican weak-dollar policy did.
After eight years of a fiscal "plan" that embraces the madness of war-time tax cuts and record deficits, it is no small wonder the American economy is tanking and the dollar is in a flat spin. Americans are bleeding at the pump, in the grocery store, and everywhere else besides, not because the tax rate is too high, but because it is too low.6
This is not to say that there is a magical tax rate below which economies fail, but that the United States has been spending money it doesn't have at an incredible pace. President Bush has, after all, a unpopular war to fund and rather than face the political fallout of putting that burden on the American people, he's chosen to borrow the difference from foreign creditors. This debt has weakened the dollar, driving prices up and the administration has responded by cutting taxes, thereby decreasing Federal Revenues even further and necessitating more yet more dollar-depreciating-debt to maintain spending levels.7
The United States has developed, it seems, a sort of economic eating disorder: lowering taxes and borrowing the difference (eating) to sooth the pain of inflation (obesity).
If American fiscal policy resembles an eating disorder, US energy policy is closer to a drug addiction. Rather than face the very serious problems posed by an American economic dependency on foreign oil, proponents of the Gas Tax Holiday are instead proposing that the United States' government cut $0.184 cents off of the price of gasoline by pulling $70,000,000 daily out of the revenue stream that pays for bridges, surface repairs, and other vital maintenance on thousands of American roadways.8
Rather than dismissing the finely trained minds that question the Tax Holiday as "elitist," perhaps Americans ought be asking some questions themselves. Is $0.184 a gallon worth $70,000,000 in daily road maintenance? Is three-quarters of a tank of gas worth 6.44 billion dollars of American transportation structure?
Who really benefits then: the average American who nets 30 bucks and a decaying roadway or the politician who sold him a line and bought his vote?
3. Facts On Fuel
4. Wikipedia: Hummer H2
5. NHTSA: Summary Fuel Economy [PDF]
6. A Weak Dollar and the Fed
7. Heritage Foundation: Federal Spending Is Growing
8. US Department of Energy