Wednesday, April 16, 2008


I probably won't venture too often into politics and economics, but this, from John McCain - wow. Just wow. In an attempt to pander to all parties, McCain is embracing the worst part of the Republican viewpoint - supply-side economics - and then jettisoning the only thing they ever do seem to understand, namely, market forces.

We've practiced supply-side for twenty of the last twenty-eight years now and the correspondence with ballooning deficits is pretty darn close to 1.0. The only time economic growth has conjured up enough cash to avoid heavy borrowing is when - no, can it be? - when the Democrats shifted taxes back to the wealthy and raised the minimum wage. Every Republican in Congress voted against the 1993 budget, predicting economic meltdown. Oh, to have such hard times again!

Then, when it comes to dealing with rising energy prices, McCain wants to artificially boost consumption! Oh, that'll fix everything. I agree that gas taxes hit the poor and working classes the hardest. But you could address two problems at once by shifting the tax burden back towards the people who can afford it, but preserving high gas prices. Even if the working stiff can afford it, he'll still be more tempted to economize his driving for $3.50 per gallon than he was at $1.50.

Now all McCain needs to do is propose a hike in payroll taxes and his journey to the dim side will be complete.

1 comment:

James Hanley said...

McCain's gas excise tax suspension is a phenomenally stupid idea. The great thing about prices is they automatically adjust demand to supply. When you have an undersupply, the worst thing to do is to force price freezes, because then people don't get the information about the undersupply.

Or, as in this case, the amount is probably too small to make much difference anyway. Sure, I hate the high price of gas, too, but a 20 cent per gallon reduction means I'll spend $2.40 less to fill my tank--bfg.

Unfortunately, none of the three contenders for the presidency knows diddly about economics. Fortunately, knowing diddly about economics isn't as important for a president as knowing diddly about foreign affairs--and by the time one of these three take office next January, the recession will be over.