07 May 2008

Dumb Debacles

A.D. Freudenheim, The Editor

Debacle #1: Delusional proposals for a gas tax holiday

Seriously: the Clinton and McCain proposals to suspend the federal gas tax for summer 2008 have very little likelihood of becoming law. There are so many problems with this proposal – from encouraging more driving rather than more fuel conservation to draining millions of dollars from federal highway maintenance funds – and so few real benefits, that even Congress will have trouble getting behind this giant ball of sickly-sweet pandering.

Still, on the off chance that it does succeed – at either the state or federal level – and if prices do drop (contrary to predictions), Americans should know that they will not simply be buying gas on a free market. That market will be played by investors who will see in the declining prices an opportunity to hedge certain bets against future prices and supplies of gasoline.

And so? Americans should hedge their bets, too. If the gas tax is suspended, people in communities across the country should pool their resources and buy large quantities of gasoline to store and save for later – for some time after Labor Day 2008, when the taxes on gasoline will have resumed. Buying five or 10 gallons for personal use, for a lawnmower or a chainsaw or an ATV, is quite normal. Buying five or 10 times that amount is less normal, but is also manageable – especially in the many suburban and rural locations in the United States where storage space is readily available.

In effect, Americans who buy and store gasoline for later would be participating in the commodities market the way that traders in Chicago and New York do, hedging their bets about the future price of fuel (which seems likely only to increase). In fact, enterprising Americans might even be able to engage local fuel companies in helping them, in exchange for a small profit (a profit smaller than the tax itself) in exchange for safely storing this fuel.

And the results? Two things would happen. First, Americans who do this would ensure for themselves a greater supply of cheaper gasoline well-past the expiration of the tax holiday, thus putting even more pennies in their pocket. Second, since Americans who support the tax holiday clearly believe that the tax should not be in effect anyway ... well, buying gasoline “futures” this way would deprive the tax authorities of even more revenue, by artificially extending the scope of untaxed gasoline beyond the planned time frame.

In fact, even for ardent conservationists who try hard not to use gasoline: if there’s a gas tax holiday, this idea still makes sense. So prepare to “save” up, America! Plus, it’s a great way to stick it to the man (or woman) running for president who might some day need the tax revenue they are currently and cavalierly trying to eliminate.


Debacle #2: Senator Hillary Clinton’s refusal to quit, Senator Barack Obama’s inability to finish her off

Last night, Senator Hillary Clinton lost her opportunity to surge ahead; she failed miserably, by losing North Carolina broadly, and by winning Indiana according to the slimmest of margins. (And thanks to the Democratic Party’s rules, such slim victories have only proportionate value.) With this latest pair of wins and losses, a few news reports note that the Clinton campaign is preparing to do battle in the one place where Mrs. Clinton stands any chance at all: the boardroom of the Democratic National Committee (DNC). She wants the party to count the delegates she claims to have won, from Florida and Michigan, which violated party rules and had non-competitive primaries.

If, like me, you believe that the DNC needs to make this decision according to rules – and not politics – please e-mail DNC chairman Howard Dean at Deanh@DNC.org to make your thoughts known. Here is the text of the e-mail I sent earlier today:

Dear Howard Dean:

This morning’s news carries several stories regarding the Clinton campaign’s plans to push to seat delegates from Florida and Michigan. While the Clinton gang claims that this is only “fair,” it hardly seems fair to either candidate since neither formally campaigned in both states, and Senator Obama was not even on the ballot in Michigan.

Regardless, it is time for you – as leader of this increasingly divided and preparing-to-lose political party – to take a stand on this issue.

The question of these delegates is (clearly) of the utmost importance to Senator Clinton, because she is not winning other state delegates the way she expected. The question of these delegates is also (clearly) of the utmost importance to Senator Obama because including Michigan and Florida would change his current lead in the race.

But Democratic voters – like me – need to be able to believe that whatever the decision on these delegates, it was made not by the candidate with the biggest arm-twisting ability, or the biggest perceived advantage in November. It needs to be very clear that the decision has been made by the leadership of the Democratic National Committee and according to an open, clear, and understandable set of rules. And that is, after all, what the rules are there for in the first place.

What are you waiting for?


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