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White House: Forget gas-tax cut (won't solve high energy prices over long haul, economist says)
ap on San Diego Union - Tribune ^ | 5/2/06 | Jeannine Aversa - ap

Posted on 05/02/2006 6:54:25 PM PDT by NormsRevenge

WASHINGTON – Cutting gasoline taxes is not a good way for the country to deal with soaring energy prices, President Bush's top economist said Tuesday.

“One of the things we worry about when we cut the tax on gasoline is that it basically stimulates additional use,” said Edward Lazear, chairman of the White House's Council of Economic Advisers.

“Over a longer period of time, it would be a significant problem ... because what it would do is it would encourage us to use more oil, not less and that is the way we got to the situation right now,” he explained. “That probably is one of the policies that we would like to avoid,” he said. Lazear's comments come as lawmakers on Capitol Hill grapple with ways to provide Americans with relief from rising energy prices.

Oil prices hit a record high of over $75 a barrel in late April; they are now hovering above $74 a barrel. Gasoline prices, meanwhile, are topping $3 a gallon in some areas.

Democrats have promoted the idea of a “tax holiday” by suspending the 18.4-cent-a-gallon federal gasoline tax for 60 days.

Lazear also raised questions about another idea that has been advocated by Republicans: providing a $100 gasoline rebate to millions of motorists.

“The administration is studying that proposal. It doesn't have the same kind of direct adverse consequence that we just talked about” in terms of a cut in the gasoline tax, he said.

“But there are other issues that we have to think about – is that the best way to be using our tax revenues? Is it the most efficient way to allocate our resources? And so there are a number of issues that are under study on that,” Lazear said of the gasoline rebate.

Lazear made his remarks during a wide-ranging question-and-answer session following a speech that explored, among other things, the gap between the wages of skilled and unskilled workers in the United States.

That wage gap has been visible for decades and “shows no obvious signs of abating in the near future,” he said. Improving the education and skills of workers is one important way to help the situation, he said.

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On the Net: CEA: www.whitehouse.gov/cea/


TOPICS: Business/Economy; Government; Politics/Elections
KEYWORDS: energy; forget; gasprices; gastax; longhaul
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To: NormsRevenge

Hopefully the high prices will spur an alternative energy source. But I have to admit, I'm angry about the high prices, and reading about record profits rubs salt in the wound. If the free marketeers are correct, this will help an alternative to surface and cutting the price artificially will only leave us more dependent on oil.


21 posted on 05/02/2006 9:02:42 PM PDT by mysterio
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Comment #22 Removed by Moderator

To: wolf24

Believe it or not, there are those of us out there with no means to do this. We can't invest, and we can't afford to move closer to our current jobs, so we have to buy the gas at any price, and if it gets too high, we buy it anyway. However, I am college educated and building my career, so someday I will be able to invest.


23 posted on 05/02/2006 9:28:08 PM PDT by mysterio
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To: NormsRevenge

The problem with cutting taxes or a tax holiday is, you lose any perceived ( read that as "political" )benefit as the price of oil continues to rise.

What good does giving up 18 cents a gallon for 60 days do, when that amount and more will be covered when the price of oil rises to 90,100 bucks a barrel ?

How about a compromise. Limit the fed & local tax indefinitely to an amount equal to the oil companies profit on a gallon of gas, approx 9.5 cents.

The onus then gets put back to where it belongs...supply! and the glaring weakness of having no new refineries.


24 posted on 05/02/2006 9:32:46 PM PDT by stylin19a (I never put my foot in my mouth...I shoot that sucker off long before it gets anywhere near my mouth)
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To: Dog Gone
Drill ANWR

If we started today, you wouldn't see a drop at the pump for seven to 10 years.

25 posted on 05/02/2006 10:02:58 PM PDT by Cobra64
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To: Reagan Man
Wrong. Any tax cut is good conservative policy. Same goes for spending reform on welfare entitlement programs. Good conservative policy.

I agree. Some around here do not understand the industry, or business in general.

26 posted on 05/02/2006 10:06:04 PM PDT by Cobra64
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To: Cobra64
If we started today, you wouldn't see a drop at the pump for seven to 10 years.

Is that supposed to be a reason not to start at all?

27 posted on 05/03/2006 5:41:14 AM PDT by Dog Gone
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To: Reagan Man

Cutting some taxes may be better than cutting others, though.


28 posted on 05/03/2006 6:27:10 AM PDT by Brilliant
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To: NormsRevenge
I'm for a flat tax the flatter the better so a gas tax is marginally better than the progressive income tax or property taxes. So if we get a shot at choosing which tax to cut I vote against cutting the gas tax.

The idea that price of gas would go down if we cut the tax on gas is somewhat complex. The price of gas is determined by the supply/demand curve. It would seem that there could be some marginal reduction in prices but it would not be a one-to-one relationship. In other words cutting 50cents taxes out a 3 dollar gallon of gas will not result in 2.50 gas.

The only way to guarantee lower gas prices is to increase marginal supply until you drive down the price. Hard to guess where that is. But for sure the equation is nonlinear.
29 posted on 05/03/2006 8:42:11 AM PDT by Sunnyflorida ((Elections Matter)
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To: Hawthorn

one addition to your excellent post.

Taking profits out of the oil companies simply raises the cost of capital for these companies and thusly reduces future investments. Not allowing for profits in terms of cost of capital is like eating your young.


30 posted on 05/03/2006 8:54:25 AM PDT by Sunnyflorida ((Elections Matter)
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To: All

This statement really gets OLD.

Most rational human beings understand the 7-10 year delay. Too many environmentalist blocks have helped put the USA in this predicament.

A better saying would be "IF America had begun drilling ANWR 10 years ago, we would have a bit more self-sufficiency in oil and less costs."

But no, politics rule the day. So we are stuck importing most oil.

So we all should just shut up and fork over that $3.50 - $4.00 per gallon. I hope it doubles in cost before 2008. Maybe this country will actually decide to do something about it - alternative energy research, embrace basic conservation principles, develop more reliable mass transit systems, and begin building nuclear sites, updated refineries, and drilling in previous "taboo" U.S. locations.

The bottom line is this country DESERVES what is happening.


31 posted on 05/03/2006 8:59:12 AM PDT by boss man
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To: NormsRevenge

"Democrats have promoted the idea of a “tax holiday” by suspending the 18.4-cent-a-gallon federal gasoline tax for 60 days"

Please tell me it's AP bias that the dems appear to be the ones advocating a tax break in this article...otherwise, this is just sad.


32 posted on 05/03/2006 11:10:08 AM PDT by goalinestan (Build it...and they won't come (as easily))
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To: Dog Gone
Is that supposed to be a reason not to start at all?

Of course we should start drilling. In fact, we should have in 1995 when Clinton voted against it (the bastard). The tree-huggers and the Feds are to blame for our energy problems.

33 posted on 05/03/2006 4:47:52 PM PDT by Cobra64
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To: Hawthorn

The best news about a tax cut is it would decrease funding available to the govt.

The second thing: the same supply would cost less. For the same amount of money, you would get more gas, and get more of the energy that gas represents.

You have to continuously starve the government until it is small enough to drown in a bathtup.


34 posted on 05/03/2006 11:51:50 PM PDT by Donald Meaker (The MG-42 has a rate of fire of 1300 rounds per minute.)
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To: Donald Meaker

Donald Meaker wrote:

>The best news about a tax cut is it would decrease funding available to the govt<

Can't disagree with that!

>The second thing: the same supply would cost less. For the same amount of money, you would get more gas, and get more of the energy that gas represents.<

Wrong. We're talking about taxes at the retail level. Removing them wouldn't do much to increase supply, at least not for a few years, since the supply comes from producers -- not from the retailers. And nobody in a position of authority (AFAIK) is proposing to reduce taxes on producers.

>You have to continuously starve the government until it is small enough to drown in a bathtub.<

Can't disagree with that either!

>The MG-42 has a rate of fire of 1300 rounds per minute<

So what? How is it for concealed carry? That's what counts in my book. I'll stick to my Ruger SP-101, chambered for .357. With autoloader, I can do ten rounds per minute. And it never jams or misfires.


35 posted on 05/04/2006 5:37:55 AM PDT by Hawthorn
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To: Hawthorn

MG-42: a great truck gun.


36 posted on 05/04/2006 9:08:58 AM PDT by Donald Meaker (The MG-42 has a rate of fire of 1300 rounds per minute.)
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To: Sunnyflorida

I'm for a flat tax the flatter the better so a gas tax is marginally better than the progressive income tax or property taxes. So if we get a shot at choosing which tax to cut I vote against cutting the gas tax.

The idea that price of gas would go down if we cut the tax on gas is somewhat complex. The price of gas is determined by the supply/demand curve. It would seem that there could be some marginal reduction in prices but it would not be a one-to-one relationship. In other words cutting 50cents taxes out a 3 dollar gallon of gas will not result in 2.50 gas.



Glad, you're not an English major.

Yikes..................



37 posted on 05/04/2006 7:19:33 PM PDT by Bogey
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To: Hawthorn
Removing [taxes] wouldn't do much to increase supply, at least not for a few years, since the supply comes from producers -- not from the retailers. And nobody in a position of authority (AFAIK) is proposing to reduce taxes on producers.

Removing taxes need not increase total supply. It would decrease the money spent on the same supply. Though I have no position of authority, that was the point of my post: to cut taxes on producers. That would either lower prices to the consumer, or increase profits, so more people would want to produce oil to get those profits. That would increase supply.

38 posted on 05/06/2006 6:27:58 PM PDT by Donald Meaker (The MG-42 has a rate of fire of 1300 rounds per minute.)
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