McCain/Big Oil ’08

At least one thing is pretty much settled, McCain’s trickle down, all the way.

John McCain proposes a summer long suspension of the Federal Gas Tax in order to help ease the burden on us Americans whose wallets are being not just pinched, but outright mauled by skyrocketing fuel prices. But watch carefully, folks, there’s trickery afoot.

The thought process here is if we lift the taxes off the oil companies, they will be free to pass the relief onto us at the gas pump. Or, put differently, that the relief shall trickle down to us. Unfortunately, the American Prospect’s Dean Baker doesn’t think that that’s how this is going to play:

According to the oil industry, they have their refineries running flat out, producing all the gas they can. This means that the price is determined on the demand side.

We have a fixed amount of gas entering the market, the question is simply what price clears the market. In this context, if we reduce or eliminate the gas tax, the price doesn’t change, the lower tax will simply allow Exxon and other oil companies to keep more profits (unless of course they were lying about running their refineries at capacity).

Since most people do not have much familiarity with economics, the media should be informing the public about the impact of Senator McCain’s proposal.

So, what Dean’s saying is that, unless I’m wrong, there shall be no trickling down, right? I mean, of course, there’s the whole environmental aspect to this whole deal, which is important. But let’s face it, people find it real difficult to care about polar bears when they have an emaciated checking account.

Let’s make sure we get this all straightened out. The economy’s not doing so hot. People are struggling, as we’ve reported here, groceries are getting more expensive, and even the most elitist of snobs couldn’t help notice that the prices at the pump have gone beyond funny anymore. And McCain wants to make us think we’re getting tax relief, but that relief has to go through big oil whom we’re supposed to trust to pass the tax break right on down to us.

Uh-huh.

Gosh, if that’s what being in touch means, please, no more, thank you.

More at Memeorandum: Hullabaloo and The New Republic. Gristmill, The Huffington Post, Mercury Rising and Outside The Beltway

(edited by DrGail)

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