John McCain, the presumptive Republican nominee, and Hillary Clinton, who is battling Barack Obama for the Democratic presidential nomination, have endorsed the tax holiday, saying it would put money into the pockets of consumers hard-hit by high fuel prices. Obama has accused both candidates of pandering in their advocacy of a temporary tax cut that might be politically popular but would have long-term detrimental ramifications.
Temporarily waiving the gasoline tax would cost the federal government $9 billion in revenues that are earmarked for construction and maintenance of highways and bridges. Postponing these expenditures would mean layoffs in the highway construction industry and would further lengthen the list of backlogged highway projects.
Most important, it would do nothing to relieve this country's dependence on foreign oil and might even exacerbate that dependence by driving up demand for gasoline at a cheaper price.
A wiser but still temporary solution to high gas prices has been proposed by 24 Republican senators, who want to give the Environmental Protection Agency the authority to waive or restructure federal mandates that require that ethanol be mixed with all gasoline sold in this country. The ethanol mandate was touted as a way to curb dependence on foreign oil, but its promise has proven to be a sham. Producing ethanol (growing corn, transporting it and distilling the ethanol) consumes as much energy as the ethanol produces, and ethanol results in lower gasoline mileage for cars.
American subsidies of ethanol (plus the exclusion of foreign ethanol) have driven up the price of corn and reduced the production of other grains and foods. Riots have broken out in a number of Third World countries because basic nutrition has become so expensive that children are starving. Flour prices have risen 50 percent this year -- a fact American consumers have noticed, too.
It only gets worse. U.S. policy calls for increasing ethanol production with subsidies and federal mandates. The country is required to increase ethanol production five-fold in the next 15 years, to 15 billion gallons in 2015 and 36 billion gallons in 2022. With the world already facing a food shortage brought on by ethanol subsidies and mandates, it is unconscionable that the United States would continue this policy.
But as long as politicians pander to votes in the Corn Belt, it might.