Barack Obama proposes to deal with rising gasoline prices by giving a $1,000 "emergency rebate" to consumers - a rebate to be paid for by taxing the so-called "windfall profits" of oil producers ("Obama pitches $1,000 energy rebate checks," August 2).E. Frank Stephenson at the Division of Labour blog writes
In other words, a critical part of Sen. Obama's strategy for reigning in high gasoline prices is to subsidize gasoline consumption and more heavily tax its production. This plan - which increases the demand for gasoline and reduces its supply - makes as much sense as trying to put out a fire by dowsing it with jet fuel.
Earlier this year, much was rightfully made of McCain's call for a gas tax moratorium and how no economists thought it was a sound idea. For example, here's Mankiw: "I don't know any prominent economist who favors this McCain-Clinton proposal."I'm sure there will be no takers but this does raise the question as to why did Obama put this idea forward in the first place? I'm sure he's too smart to believe its a good idea and even if he did he has advisers who would tell him its a stupid idea, so why say it? The reason must be political, that is, he thinks its a vote winner. Or in other words he thinks voters are really stupid.
What I'm wondering now is if there are any prominent economists who support Obama's tax/rebate scheme? Any takers? Anyone?
So either Obama doesn't understand the economics of what he said or he does, but doesn't care as long as he thinks it will win him votes. Neither of which look like good options.
2 comments:
Isn't Austan Goolsbee Obama's advisor?
Pronoucements like Obama's must tempt him to quit.
Or he wants a job in Washington soooooo bad he will agree to anything to get it.
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