Democrats divided over $88/year $22.08

From the NYTimes (Dems divided ...):

Senator Hillary Rodham Clinton lined up with Senator John McCain, the presumptive Republican nominee for president, in endorsing a plan to suspend the federal excise tax on gasoline, 18.4 cents a gallon, for the summer travel season. But Senator Barack Obama, Mrs. Clinton’s Democratic rival, spoke out firmly against the proposal, saying it would save consumers little and do nothing to curtail oil consumption and imports.

While Mr. Obama’s view is shared by environmentalists and many independent energy analysts, his position allowed Mrs. Clinton to draw a contrast with her opponent in appealing to the hard-hit middle-class families and older Americans who have proven to be the bedrock of her support. She has accused Mr. Obama of being out of touch with ordinary Americans who are struggling to meet their mortgages and gas up their cars and trucks.

Let's say gasoline demand is perfectly inelastic (in order to maximize the impact of the tax). If I drive 12,000 miles and get 25 miles per gallon, I buy 480 120 gallons of gasoline each year summer. Saving 18.4 cents per gallon amounts to an additional $88.32 per year $22.08 in spending money.

Update: This "analysis" also assumes a perfectly elastic supply curve. Truly, leading to a vast overestimate of consumer savings at the pump. That is the dumbest update ever.

Meanwhile, ex-President Clinton is on campus today campaigning in the old Varsity gym. The Health Promotion for Faculty and Staff facilities are in the same location. Here is the email I received at 11:37:

Due to the event occurring in the Varsity Gym today, Health Promotion will be closed from 1-4, and will reopen at 4 until normal closing time at 6. Sorry for any inconvenience.

Sorry? Hrmph.

Comments

[odograph]

"Let's say gasoline demand is perfectly inelastic"

I think I went off on the presumption of that inelasticity, back when it was projected from then-supporting data into this future.

It turns out I was right (well you really knew that, and were going for a particular "teaching point"), and in fact elasticity has changed from what we thought it was:

As gas prices increase, consumption decreases

Again, it's one thing to take a point-measurement, a "pulse," of price elasticity, it's another to make a prediction that it will not change.

[odograph]

"Let's say gasoline demand is perfectly inelastic"

I think I went off on the presumption of that inelasticity, back when it was projected from then-supporting data into this future.

It turns out I was right (well you really knew that, and were going for a particular "teaching point"), and in fact elasticity has changed from what we thought it was:

As gas prices increase, consumption decreases

Again, it's one thing to take a point-measurement, a "pulse," of price elasticity, it's another to make a prediction that it will not change.

[Michele Whitney]

Hope you don't mind, but I posted a linnk to this story on my MySpace page. Wouldn't it cost more than that for the time and effort of trying to get the legislation passed???

[joshua corning]

If I drive 12,000 miles and get 25 miles per gallon, I buy 480 120 gallons of gasoline each year summer. Saving 18.4 cents per gallon amounts to an additional $88.32 per year $22.08 in spending money.

120 gallons of is not the amount of gasoline that is consumed to provide you with the goods and services you and your family consume.

Presumably if less money is sent to the government to provide those goods and services then the cost of those goods and services would drop.

In a period of stagflation cutting consumption taxes would be a very good idea....even if the amount politically feasible is relatively small.

Still if the Dems were honest they would allow for more offshore drilling and open up Anwar to oil production.

[odograph]

Sorry for the double, I remembered the comments popping right up.

Joshua, what's your plan on the $9 trillion debt?

ANWAR is too small compared to US (and now world) consumption, as thousands of studies show.

[名古屋 風俗]

頑張って下さい。
名古屋　風俗

[Bob]

I totally agree with this last comment.

[Bob]

Let's put this in perspective. I will use about 100 gallons this summer saving me about $18. My property taxes last year were $13,000. I earn less than $100,000 per year. Saving $18 dollars is not significant to the middle class. We need property tax and sales tax relief - the only way that is going to happen is if we increase the federal marginal income tax rates on the wealthy (rates above $100000 should begin to be increased until it's about 75% on incomes above say $10,000,000). This money would then be funelled back to the states for schools and other necessities, allowing local governments to decrease local sales and property taxes. Couple that with an increase in the minimum wage (tied to inflation) then continued inflationary stimulus and you get middle class relief. Of course you would only need the inflationary stimulus until wealth is redistributed more reasonably. The problem is that people fear inflation when in reality it can be very usefull in redistributing income to the less wealthy.

[joshua corning]

Joshua, what's your plan on the $9 trillion debt?

Cut spending to the bone

ANWAR is too small compared to US (and now world) consumption, as thousands of studies show.

Show one.

and so what. Increased supply is increased supply...plus I said ANWAR and off shore drilling.

Plus there are estimates that show it bigger then the lower estimates.

Plus ANWAR is an example of general US policy that is anti-production which has lead to the higher prices at the pump.

[gormk]

Joshua - Here is an article that discuss several studies and expert opinions supporting Odograph's main point:

http://www.reuters.com/article/latestCrisis/idUSN29340330

Here is an opinion more in line with what you're saying (albeit, completely ignoring the concept of externalities):

http://www.cnn.com/2008/US/04/30/shell.qa/index.html

[joshua corning]

We need property tax and sales tax relief - the only way that is going to happen is if we increase the federal marginal income tax rates on the wealthy (rates above $100000 should begin to be increased until it's about 75% on incomes above say $10,000,000).

The ghost of FDR and the decade long extension to the Great Depression he caused lives.

[joshua corning]

Hey i just had an idea.

The US government has tons of land and resources and tons of debt...how about the US government sells off all its land and resources to pay off its debt.

[joshua corning]

Joshua - Here is an article that discuss several studies and expert opinions supporting Odograph's main point:

http://www.reuters.com/article/latestCrisis/idUSN29340330

Cool...now show 1990 more studies and then you will have Thousands.

[Bob]

Joshua, where is the proof that increasing marginal tax rates on the wealthy and decreasing rate on everyone else by the same amount costs jobs? I believe the opposite is true.

[gormk]

Joshua - What's the point you are trying to make? The use of the word "thousands" was clearly a figure of speech. Why don't YOU come up with references to ONE study that demonstrates with a general equilibrium analysis* that drilling in ANWAR (or in any other alleged significant US reserves) will result in less US dependence on oil (and reduced gas prices faced by consumers at the pump).

*See the last paragraph of the aforementioned article if you don't understand what I mean by GE analysis.

[joshua corning]

Joshua, where is the proof that increasing marginal tax rates on the wealthy and decreasing rate on everyone else by the same amount costs jobs? I believe the opposite is true.

Increasing taxes on employers increases employment.

Reading that once lacks any need for me to prove its negative.

[joshua corning]

Why don't YOU come up with references to ONE study that demonstrates with a general equilibrium analysis* that drilling in ANWAR (or in any other alleged significant US reserves) will result in less US dependence on oil

Increases in supply with static demand will lower prices.

I said nothing about how it would result in less dependence.

[...]

jc,
I like the idea of states and feds selling some of their land holdings. The people need and want more land, and the governments would have a larger property tax base. But, how do we keep the sales from going to the angry Arabs and other non-friendlies with money to spend? I don't like the idea of the Iranian gov't, or their proxies, buying up 20% of So Dakota.

[odograph]

Right, Joshua ... that makes sense (not) ... since ANWAR would surely provide pennies of savings at the margin ... it is the solution to our energy needs!

Isn't talking point logic wonderful?

(It's amazing that an entire flock harp on ANWAR as the solution ... and as long as there are not numerically 2000 disproofs, it still is, right?)