Tuesday, May 02, 2006

You aren't reading my blog, Congressman 

If you had read this first, you would not have written this:
�There has been too much grandstanding with politicians holding press events at gas stations and pointing fingers, but not offering any real solutions to the high cost of gas prices,� said Mark Kennedy. �I�m proposing the Summer Relief for Motorist Act to move beyond the partisanship, beyond the politics and beyond the finger-pointing. I�ve proposed a real solution that would immediately lower prices at the pump 18.4 cents per gallon.�
It will not, and you really should know better. Markets respond to changes in incentives, and the gas market would respond to the loss of the gas excise tax. James Hamilton argues that under plausible scenarios the net effect on gas prices is nil ... but a big increase in oil company profits. As I suggested last week, Congressman Kennedy, that has entertainment value in watching Chuck Schumer spontaneously combust, but does little for the economy.

Moreover, as Hamilton also points out, if Kennedy has in fact found several billion dollars of unpaid taxes that need collecting -- which his accounting background makes him well-suited to find -- there's this little thing called the deficit...

UPDATE: Craig Westover and I are of the same mind on this, practically at the same time. This happens so often that it is actually getting scary.