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By Brian Faler

May 5 (Bloomberg) -- More than 200 economists, including four Nobel prize winners, signed a letter rejecting proposals by presidential candidates Hillary Clinton and John McCain to offer a summertime gas-tax holiday.

Columbia University economist Joseph Stiglitz, former Congressional Budget Office Director Alice Rivlin and 2007 Nobel winner Roger Myerson are among those who signed the letter calling proposals to temporarily lift the tax a bad idea. Another is Richard Schmalensee of the Massachusetts Institute of Technology, who was member of President George H.W. Bush's Council of Economic Advisers.

The moratorium would mostly benefit oil companies while increasing the federal budget deficit and reducing funding for the government highway maintenance trust fund, the economists said.

``Suspending the federal tax on gasoline this summer is a bad idea, and we oppose it,'' the letter says. Economist Henry Aaron of the Brookings Institution is among those circulating the letter. Aaron said that while he supports Obama, the list includes Republicans and Clinton supporters.

The gas-tax suspension has become a flashpoint in the race for the Democrat presidential nomination between New York Senator Clinton and Illinois Senator Barack Obama. Clinton and Republican McCain tout the proposal as an example of their concern for struggling middle-class families. Obama, who estimated it would save the average driver less than $30, calls the idea a ``gimmick,'' rejecting it on similar grounds as the economists.

Dismiss the Objections

McCain and Clinton dismissed the objections.

``I find people who are the wealthiest who are most dismissive of a plan to give low-income Americans a little holiday'' so they have ``a little more to give to their children and enjoy the summer a little more,'' McCain said today. ``Thirty dollars means nothing to a lot of economists -- I understand that. It means a lot to some low-income Americans.''

Clinton said yesterday on ABC's This Week with George Stephanopoulos that ``I'm not going to put my lot in with economists'' because ``we would design it in such a way that it would be implemented effectively.''

The proposal has been rebuffed by House Democratic leaders including Speaker Nancy Pelosi of California and Financial Services Chairman Barney Frank of Massachusetts.

The environmental group Friends of the Earth endorsed Obama over the weekend and called Clinton and McCain's moratorium proposals ``sham solutions that won't ease the pain at the pump.''

Rivlin, who headed the CBO before running the White House budget office during the Clinton administration, was among the Clinton backers signing the letter.

``I don't have to agree with everything she says, and I think she was wrong on this one,'' Rivlin said in an interview today. ``If anything, we need higher gas taxes.''

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Obama Helped Lead Efforts To Pass Amendments That Improved The Bill's Renewable Energy Provisions And Was Singled Out For His Work As A Negotiator On The Energy Bill's Ethanol Provisions. In 2005, Obama passed amendments to the 2005 Energy Policy Act which would double the amount of ethanol used in our gasoline supply by 2012 (from 2 billion to 8 billion gallons); provide a tax credit for the retail purchase of E-85 fuel; and established an applied research program to improve technologies for the commercialization of a combination hybrid/flexible fuel vehicle; or a plug-in hybrid/flexible fuel vehicle. The Chicago Sun-Times reported, "Hastert, meeting with reporters on Friday, praised the "incredible teamwork" of the delegation, singling out freshman Sen. Barack Obama (D-Ill.) for his work on the House-Senate committee, which cut the final deals on the transit bill and ethanol tax breaks. The energy bill included an incentive for the use of what is called E-85, a blend of 85 percent ethanol and 15 percent gas that can be used in "flexible fueled" cars and is supposed to be cheaper than conventional fuel. The bill calls for gas companies to get a tax credit to cover 30 percent of the cost to install E-85 pumps at service stations, up to $30,000." [Chicago Sun-Times, 7/30/05; AP, 7/27/05; H.R. 6, Became Public Law No: 109-58; S. 918, 109th Congress; SA 670 agreed to, 5/12/05; H.R. 6, Became Public Law No: 109-58; S. 918, Referred to the Committee On Environment and Public Works; SA 851 to HR 6, Passed by Unanimous Consent, 6/23/05; H.R. 6, Became Public Law No: 109-58; S. 650, 109th Congress; HR 6, Vote 139, 6/15/06, Passed 70-26, D:32-12, R:38-14, I:0-0]

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phi1618 said:

The most interesting aspect of this story is that Obama has the balls to reject a stupid, pandering idea for what it is.

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I LOVE TAX CUTS! ( I'm sure Obama hates them.)


Its such a good idea we should make the tax cut PERMANENT!

lonestar2004 said:

phi1618 said:

The most interesting aspect of this story is that Obama has the balls to reject a stupid, pandering idea for what it is.

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I LOVE TAX CUTS! ( I'm sure Obama hates them.)


Its such a good idea we should make the tax cut PERMANENT!

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downforpot said:

So the top economists don't know what they are talking about? You got a PhD in economics or something?

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No, i just feel cutting any tax, any time is a good idea!

lonestar2004 said:

downforpot said:

So the top economists don't know what they are talking about? You got a PhD in economics or something?

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No, i just feel cutting any tax, any time is a good idea!

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  "Top economists", as a group, tend to be about as unified as a herd of cats.  Douchebag journalists with an agenda can always find an economist to support any idea they wish.  Marx was a "top economist".  How'd that work out?

zappaisgod said:

lonestar2004 said:

downforpot said:

So the top economists don't know what they are talking about? You got a PhD in economics or something?

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No, i just feel cutting any tax, any time is a good idea!

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  "Top economists", as a group, tend to be about as unified as a herd of cats.  Douchebag journalists with an agenda can always find an economist to support any idea they wish.  Marx was a "top economist".  How'd that work out?

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