Clinton ties gas tax suspension to oil industry profits
One day after Republican presidential contender John McCain called on the federal government to suspend the gas tax for the summer driving season, Sen. Hillary Clinton said any such move would need to be tied to a windfall profit tax on oil companies in order to maintain funding levels for important highway programs.
The average price of a gallon of gasoline has leaped to $3.39 in the past year and higher in some parts of the country. Diesel fuel used by truckers and other heavy equipment operators is already near the $4 per gallon mark and many analysts are predicting $4 gasoline this summer. Energy costs are a major factor in the rapid rise of inflation across the economy and are causing Americans to tighten their belts on other types of spending.
Clinton said during last night’s Democratic Party debate in Philadelphia that as president she would have the Justice Department and Federal Trade Commission investigate potential market manipulation by energy traders, stop putting oil in the Strategic Petroleum Reserve and release some to help push down oil prices.
She stopped short of endorsing a gas tax moratorium, but said if implemented it would have to be tied to higher taxes on oil companies.
“If we have that, then we should have a windfall profits tax on these outrageous profits of the oil companies, and put that money back into the highway trust funds so that we don’t lose out on repair and construction and rebuilding,” she said.
Sen. McCain on Tuesday proposed a halt on gas tax collections from Memorial Day to Labor Day, saying it would provide an “immediate economic stimulus” to hard-hit Americans. He also called for a suspension of oil purchases for the Strategic Petroleum Reserve, but made no mention of a temporary drawdown.
His plan was immediately criticized by Democrat leaders on the House Transportation and Infrastructure Committee and organized labor.
T&I Chairman James Oberstar, Minn., and Peter DeFazio, Ore., issued a statement that said suspending the 18.3-cent per gallon gas tax would save most drivers less than $30 for the entire summer but would cost states billions of dollars in needed highway construction, highway safety and transit funding, and exacerbate congestion by delaying improvements.
“The McCain proposal would bring the Highway Trust Fund ' to the edge of insolvency. It would cut Highway Trust Fund revenues by almost $3 billion per month. Under current law funding, that will create an estimated $12 billion shortfall in the Highway Trust Fund by the end of fiscal year 2009,” they said.
The statement continued: “The McCain plan does not require that oil companies reduce the price of gasoline, making it likely that oil companies would simply pocket the difference. That is what happened in 2001, when Illinois and Indiana suspended their motor fuel sales taxes. Research shows that the impact on consumers was minimal and infrastructure investments in those two states were shortchanged millions of dollars.
“Instead of providing needed relief from high gas prices, McCain's proposal would cost jobs, worsen congestion, compromise safety and simply provide another windfall opportunity for the oil companies.”
The AFL-CIO’s Transportation Trades Department said a gas tax hiatus would cost about 311,000 jobs.
Sen. Barack Obama also favored an investigation into potential price gouging by oil companies and a windfall profits tax that would be used to invest in renewable energies. Raising fuel efficiency standards on cars is a necessary long-term solution, he added.
The debate about gas taxes while the economy is treading near recession makes it less likely that a blue-ribbon surface transportation financing panel’s call for a 40-cent gas tax hike over five years to help address the nation’s crumbling infrastructure will be adopted by Congress. ' Eric Kulisch