04/15/2008 12:44 pm ET Updated May 25, 2011

McCain reveals hypocrisy, cynicism with call for gas-tax holiday, energy budget freeze

Any remaining glimmer of hope that Senator John McCain might be the principled, non-cynical politician to transform our energy policy and avoid the dual calamaties of peak oil and climate catastrophe died today. The Associated Press reported that:

John McCain wants the federal government to free people from paying gasoline taxes this summer ... aimed at stemming pain from the country's troubled economy....

To help people weather the downturn immediately, McCain was calling for Congress to institute a "gas-tax holiday" by suspending the 18.4 cent federal gas tax and 24.4 cent diesel tax from Memorial Day to Labor Day....

Among other proposals, McCain said he would ... Suspend for one year all increases in discretionary spending for agencies other than those that cover the military and veterans.

Sad. In fact, doubly sad.

Okay -- let's provide more tax relief to the American people, as progressives have been pushing hard to do. So why not cut income or payroll taxes or give the public a larger direct rebate -- one that is linked to income so that the rich don't get yet more money that should be going to middle class and poor. Cutting the gas tax will send a lot of money to the rich, and not bloody much money to the people who can't afford a car, especially the urban poor. Who is out of touch?

[UPDATE: I will examine the regressivity of the gas tax in another post. Bottom line -- as a National Bureau of Economic Research paper concluded (here), "The gasoline tax thus appears far less regressive than conventional analyses suggest." This is especially true for the lowest income groups.]

The AP describes McCain's strategy as pursuing "a trickle-down effect." McCain says "because the cost of gas affects the price of food, packaging, and just about everything else, these immediate steps will help to spread relief across the American economy" [his speech is on his website here]. What? So we have a temporary gasoline tax cut that directly helps people who drive a lot and that eventually trickles down to the price of ... "packaging" (!), which in turn will trickle down to the poor and everyone else. Seriously.

Progressives should calculate the value of the McCain tax cut and offer the same amount directly to the poor and middle class. Enough trickle down nonsense already.

And no -- I am not terribly concerned that lowering the gas tax will temporarily boost gasoline usage and greenhouse gas emissions (although it obviously will a little bit). What I am terribly concerned about is that this strongly suggests a President McCain would be prepared to walk away from the price for carbon he plans to impose upon the public -- the first time there is a recession after a cap & trade bill is passed.

Let's be very clear -- the greatest threat to the long-term health and well-being of this country is unrestricted greenhouse gas emissions. The key strategy that McCain and Obama and Clinton have embraced is a cap on emissions coupled with a trading system that sets a market price for carbon dioxide. That is how you get decarbonization at the lowest possible cost. Now, the greatest threat to the success of a cap and trade system is that somebody might artificially limit the carbon price, either through a safety valve designed into the system (see here) or because some weak-kneed President (or Congress) walks away from that price the first time the economy suffers a downturn.

McCain would appear to be that weak-kneed Presidential hopeful -- especially given that he has also walked away from using "mandatory" to describe his cap and trade system (see here and here). Perhaps this is what he means by not "mandatory" -- the cap disappears the first time there is a recession or energy prices spike.


And then there is his equally lame desire to freeze all increases in nonmilitary discretionary spending -- proposed in the middle of a recession no less. Doesn't he know that government spending is an economic stimulus?

And, such a freeze would eliminate all of the increases in the clean energy budget that Congress has been voting for to make up for the cuts of the Bush administration.

If McCain would freeze such spending during a recession, then presumably he would cut such spending once we are out of the recession -- especially since we are going to have to pay for his renewal of the trillion-dollar Bush tax cuts for the wealthy and his 100-year occupation of Iraq, while desperately trying to not balloon the budget deficit even further.

This misguided policy view reflects the earlier statements by McCain campaign policy adviser Douglas Holtz-Eakin:

"The basic idea is if you go with a cap and trade and do it right with appropriate implementation, you don't need technology-specific and sectoral policies that are on the books and that others are proposing simultaneously."

And remember, although McCain supports much greater subsidies for the mature nuclear power industry, when he was asked, "What's your position on subsidies for green technologies like wind and solar?" he said:

"I"m not one who believes that we need to subsidize things. The wind industry is doing fine, the solar industry is doing fine. In the '70s, we gave too many subsidies and too much help, and we had substandard products sold to the American people, which then made them disenchanted with solar for a long time."

So McCain talks a very good game about global warming and concern about rising dependence on oil -- heck, he's got Jim Woolsey pitching his energy policy for him -- but he doesn't walk the walk. I'm not even sure he's near the right path. If you care about oil or climate, McCain is obviously not the one.

Related Posts: If you want to read some political spin on this, DailyKos has an analysis (here).