Paul Krugman: Obama Ad Distorts My Column, He Should Retract It

A few days ago, the Obama campaign released an ad defending his opposition to Hillary Clinton's gas tax holiday. The Clinton campaign immediately challenged the sourcing of one the ad's claims. ABC's Jake Tapper reported:

The quote in the ad says of Clinton's gas tax vacation proposal, "experts say it will boost oil industry profits," and it cites the New York Times on April 28, referring to a column by Paul Krugman -- generally a columnist supportive of Senator Clinton's plans.

But the column in question -- and the quote -- have nothing to do with Clinton. They have to do with Sen. John McCain's gas tax holiday proposal -- which Krugman refers to as "a measure that would, in fact, do little to help consumers, although it would boost oil industry profits." ...

Krugman says that the "McCain gas tax plan is a giveaway to oil companies, disguised as a gift to consumers. Is the supply of gasoline really fixed? For this coming summer, it is. Refineries normally run flat out in the summer, the season of peak driving. Any elasticity in the supply comes earlier in the year, when refiners decide how much to put in inventories. The McCain/Clinton gas tax proposal comes too late for that. So it's Econ 101: the tax cut really goes to the oil companies."

And then this key sentence: "The Clinton twist is that she proposes paying for the revenue loss with an excess profits tax on oil companies. In one pocket, out the other. So it's pointless, not evil. But it is pointless, and disappointing."

So he suggests that Clinton's gas tax proposal will give revenues to oil companies then take them away with her "windfall profits."

Now Paul Krugman is speaking out. In a blog entry posted Monday, he writes:

I did not say that the Clinton proposal would increase oil industry profits. If the ad implies that I did, it should be retracted.

The Clinton proposal is financed by an excess profits tax. At worst, it sends money in a circle. In practice, it would probably reduce oil industry profits at least slightly, since the rise in the pre-tax price of gasoline probably wouldn't wipe out all of the tax cut.

I was very clear when I wrote about the Clinton proposal that while I didn't think it was good policy, it was not the same as McCain's, and relatively harmless. If the Obama people are suggesting otherwise, they're being deliberately dishonest.

That said, this whole point may be moot. The current version of the ad already seems to have been changed to remove the reference to Krugman's piece. Watch it:

Comments

[OriginalScreenName]

Opps, Paul got caught falling for Hillary double speak or worse - hypocrisy. The same plan is not bad if it comes from Hillary, but disastrous if it comes from McCain.

Hey Paul - she's already spent the "wind fall profits tax" on renewable energy - which means it would be disastrous to jobs and our infrastructure. Plus, there's no way the profits tax would ever pass in time for summer. You should be pointing this out to your readers. That Hillary cannot pay for her Gas tax holiday. That she is so obviously spending the same money twice.

Sorry Paul - Obama is more accurate with your words than you are. Without the Windfall profits tax (which will never get passed with Bush as president), Hillary's plan is just as disastrous as you claim McCain's is.

[LisainNYC]

Get over yourself, Paul.

[Eddy333]

Hey, you help out a campaign that consistently distorts almost everything it comes in contact with, you can expect your words to get distorted in turn every once in a while. Careful who you make your bed with, Paul. they'll just wind up dragging you down into the gutter

[SCG]

Did Krugman mention the merger between Exxon and Mobil which occured during the Clinton administration?

http://en.wikipedia.org/wiki/Exxon_Mobil

Read the page, it's a wonderful company.

[AlieNation]

Paul Krugman's pro Hillary machinations have become so shrill that he is now reduced to parsing Obama's sentences.

It is true that Krugman criticized the Hillary gasoline tax holiday as pointless but if he hadn't then his readership would have finally been forced to admit that Paul is nothing more than another sycophant, slobbering up the crumbs at Hillary's feet.

Don"t worry Paul we know who you and Hillary are...honorary members of the Lieberman wing of the Republican Party.

[drivensnow2525]

.......By a show of hands.....please show me the people who are willing to trade a total of $30 out of their pocket for the jobs of 7,000 road construction workers ?? By a show of hands, please show me the people who are willing to trade $30 out of their pockets in exchange for millions of dollars from the Federal Govt. for road construction ?? Those with their hands in the air are die hard Republicans, who say.....I got mine.....tough on you. Get serious.....Hillary is going to get Republican Senators to vote against the oil companies for a "windfall profits tax" in the next month, so we can have a gas tax holiday ?? 60 Senators are needed to pass the bill, and we are supposed to believe even if they did get 60 Senators, that George "oil man" Bush is going to sign it into law ?? As Obama says......the politics of the old....that's all they know.......Hillary equals PANDERING to the nth degree. January 20, 2009.....the end of an ERROR...............OBAMA ....2008.

[Daisy1111]

You guys are such Hillary haters you don't see that she's handing the party a good issue for the General Election.

It's not pandering -- it's a strategic move against the Bush administration. She's thinking several steps ahead.

She proposes the tax relief bill and she sends it to Congress where the DEMs still do not have a 60% majority to get the bill through. 51 votes is not enough. You need REPUBS to vote Yay to get the bill through.

Now she has put REPUBs in the position to publically vote against it. These are REPUB senators and congressmen -- some coming up for re-election in Nov. So now they have a choice:

Vote NAY and look bad in their own districts. Or vote YAY to look good.

1) They vote NAY she has handed the DEMS a General Election issue: Republicans don't understand the needs of the middle class.

2) They vote YAY it goes to Bush -- does he veto this and make his party look insensitive to the blue collar workers the GOP needs to win?

Now Hillary has jacked up the GOP and moves the Nov. campaign to: "It's the economy stupid."

If Obama is the nominee what she has done now will help him in Nov.

I am surprised Obama doesn't see how this would serve him.

Instead he's making the same argument most republicans would make to reject the bill.

Bad move BO.

[Henk]

Its bad policy. While the game playing you describe may or may not work out a sweetly as you imagine it does not change the fact that it is simply a very BAD idea.Why can't Clinton supporters see that?

[MelArawak]

Paul Krugman should get a life. How churlish. Senator Barack Obama is under no obligation to retract anything. There are a series of columns in the NYT I'd like Krugman to retract but then he probably would say he had freedom of speech and the press. It would have been good to see Krugman counter the distortions of Senator Obama's comments in San Francisco but he and his elk like Bill Kristol and Karl Rove want double-standards for themselves and their cronies. The use of Krugman's words in this ad gives him a constructive role for a change. Now, lets move on!

[boaz16]

His work is a part of his life and his work is his word. It's his fault for referring to it as the "Clinton/McCain" proposal, however, and the lack of distinction on his part there muted the later distinction. Also, Krugman's nuts about Healthcare. He was for Edwards prior to Edwards dropping out. He moved to Clinton because of Obama's rhetoric on HC and because her plan is most similar to Edwards's. HuffPosters (obama supporters) who read his column might get more out of returning fire on the actual merits/lack of merit of an arguments rather than getting shrill about a guy who is making an Anti-Hillary point here but doesn't want to be used by an Obama campaign whose idea he doesn't agree with. How churlish.

[qwr]

I ask Huffpo's readers to please not click on any link to the NYT, especially not one that goes to Krugman's blog. Next thing we know, we'll be linked to Kristol's column.

[Mscharizmaa]

Krugman, get over yourself. Really.

[Nonamnesiac]

I am anti-Hillary and won't vote for her if she gets the nomination because she's a narrow-world-viewed warmongerer who would put members of my family in the military at risk of life and limb against the interests of the United States.

Hillary is right on the gas tax and her critique of economists and Obama is wrong. Hillary is lying as usual and will not get a gas tax suspension passed. Hillary is one of the architects of the new globalized economy that has stripped the working class of union scale jobs, and caused a deterioration in the conditions of the jobs that are left by supporting deregulation, outsourcing, unbridled free trade and "reinventing government" meaning cutting regulatory jobs.

But what workers are looking for is a more social democratic economy like the one we had -- with job security, a safety net that's liveable, decent communities and not having to move far away in order to work -- like Europe.

The neo-llberal US economistocracy has rejected that model, although it works in Europe and Canada and provides a better life for ordinary working people, but not as good a life for the wealthy.

Suspending the gas tax appears to be an effort to directly help those whom the neo-liberal ecnomistocracy have rejected in favor of their barbaric model.

It's not going to help, but Obama showed no comprehension of this at all. He'd better straighten that out if he wants to win.

[08timefortruth]

So you're saying that workers are willing to save $30 instead of their jobs? Now I want to know who that little bit of savings is going to help. McCain and HC both say it gives poor people a little bit more money for something else......news flash-it isn't poor people who are buying all the gas because they can't afford it period and 18 cents a gal is not going to change that. Add to that the fact that she nor McCain can get this nonsense passed by "summer" and it becomes twice as obvious this is nothing but a political ploy.

I know we Americans have dumbed up lately but gee isn't it time we thought something through instead of jumping on the bandwagon leading to disaster?

[Nonamnesiac]

No one believes those jobs would be lost if the gas tax was suspended for 3 months. Everyone believes the economists are simply paid advocates of the wealthy and will only come up with arguments against anything that might possibly help working people.

The neo-liberal economistocracy IS full of feces. There are other models that provide better economic conditions for the vast majority of the people than the US model. Europe and Canada both provide better living conditions for working people than the US does according to UN statistics.

The US economy was more social democratic while the baby boomers were young and they are looking for that again. As they realize it's not going to happen, they simply want to believe that even a minor reform is at least a look in their direction. It's not "dumbing up", it's desperation.

And Obama doesn't get it. He really is a product of Ivy League thinking and has forgotten where he came from, or he would at least show some sensitivity. Hillary just lies about it, but shows verbal sensitivity, even though everyone knows she's lying.

[TheInsomniac]

What Krugman, and everyone, are failing to point out is that Hillary's proposal has two separate components. First, a gas tax moratorium. Second, a tax on oil company profits to make up for lost revenue. HOWEVER, these are being packaged independently. She's pushing for the first one with no guarantee that the second will occur (and it probably won't). Krugman is being intentionally disingenuous here - AGAIN.

[CindyKay]

You are still missing the most Important thing !
Hil-LIAR-Y Cannot Deliver a Gas Tax Holiday ......Period.
She is PANDERING!!!!!

[Braveheart1]

Exactly! It will never pass in Congress and she knows it! I don't understand why her supporters do not conclude that!

[ohmercy]

"If the Obama people are suggesting otherwise, they're being deliberately dishonest. " Krugman

Politics as usual, only worse since he claims not to be playing the game and points fingers as though he is above what he clearly does over and over.

http://tinyurl.com/3zs6eb

...But Obama is wrong. He did not learn this lesson. In fact, 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) found that it actually worked to a large extent...

...This suggests that the tax holiday delivered at least 60 percent of the tax savings to motorists....

...But this is not what happened in Illinois and Indiana back in 2000. And there are factors at work today that might provide equal or more "elasticity" to the producers, and prevent consumers from paying the price for the tax cut.
replyReply favoriteFavorite

[08timefortruth]

Lets see 60% of $30.00=$18.00=NOTHING REALLY and costs jobs, impacts highway maintenance, and decreases federal revenue for the transportation department.

The report you sited does not look at the bigger picture of the impact this stupid tax holiday would have on the whole country.

[SpinCycleRadio]

The example is irrelevant because.

Illinois is a part of the regional supply/demand picture, not the whole thing.

The proportion of the price of gas that is the underlying crude is higher today.

The gas companies were not being socked with a simultaneous new tax, giving them a very big incentive not to reduce pump prices

[ohmercy]

I haven't begun reading the comments yet, but I'm sure there will be no surprises.
invective, bile, rage, and anti Hillary Hate.

so predictable.
http://tinyurl.com/3zs6eb

But Obama is wrong. He did not learn this lesson. In fact, 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) found that it actually worked to a large extent.

The study is titled "$2.00 Gas! Studying the Effects of a Gas Tax Moratorium," by Joseph J. Doyle Jr. and Krislert Samphantharak. Download the PDF here. The authors concluded that "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%."

This suggests that the tax holiday delivered at least 60 percent of the tax savings to motorists....

...But this is not what happened in Illinois and Indiana back in 2000. And there are factors at work today that might provide equal or more "elasticity" to the producers, and prevent consumers from paying the price for the tax cut.

[CindyKay]

Your Missing The Point , Hil-LIAR-Y CANNOT Deliver a Gas Tax Holiday . She is PANDERING !

[krol]

Delivered 60% of the tax savings.

Ok. Do the math. You're saying that consumers will save, roughly, 12 cents on every gallon. 50 gallons on average a month times three months equals? 18 dollars in savings for the summer.

And to propose such a stupid incentive to consume MORE gas at a time that's critical to reduce global warming emissions? I thought Clinton said she was going to work on solving that?

Obama is correct that we need to focus our energy on alternative energy. We need to invest in research that will help our economy shift to something that's sustainable.

$18? You've got to be kidding me.

[SpinCycleRadio]

The article is not relevant.

Illinois is only a small portion of the regional, much less national. supply/demand picture.

Crude Oil is now a much larger part of the price of gas.

Hillary wants to hit the oil companies with an offsetting tax increase elsewhere. So she wants you to believe that they WILL pass along the tax decrease but they WONT pass along the matching tax increase. What a complete fantasy!

McCain at least believes in tricle down, that if you pass a bunch of money to the oil companies a little will fall down to the consumer. Maybe very little, but a little.