McCain's Amateur Economics

John McCain has said that he doesn’t know much about economics, but this morning he set out to prove that fact.

McCain urged Congress to institute a “gas-tax holiday” by suspending the 18.4 cent federal gas tax and 24.4 cent diesel tax from Memorial Day to Labor Day. He also renewed his call for the United States to stop adding to the Strategic Petroleum Reserve and thus lessen to some extent the worldwide demand for oil.

At the very point when the market is sending signals to consumers to buy more fuel efficient vehicles and the United States Treasury is increasing its borrowing to fund McCain’s War surge, McCain want to make gas cheaper so people will keep buying SUV’s and cut income to the Treasury so we will have to borrow more from the Chinese government. Back in February during a Republican Debate, McCain said he was going to cut wasteful spending so much that we would no longer have to borrow from the Chinese. He’s a magician!

These brilliant economic strategies probably issue from the mind of McCain’s key advisor, former Senator Phil Gramm, a man who did more damage in his short Senate tenure than most bad politicians can do in a lifetime.

“Phil Gramm’s career was as the most aggressive advocate of every predatory and rapacious element that the financial sector has,” Mr. Galbraith said. “He’s a sorcerer’s apprentice of instability and disaster in the financial system.”

The very idea of Phil Gramm as Secretary of the Treasury boggles the mind.


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0 Responses to McCain's Amateur Economics

  1. Dan says:

    The very first thing I thought when I read this was, “Sure, cut tax revenue further, borrow more money, and throw it on the debt pile. What’s the worst that can happen?”

  2. Should we turn it over to those experienced economic geniuses Hillary and Barrack? A nice trillion dollar tax increase is the route to prosperity.

  3. Dan says:

    McCain is pushing another frequent Republican tactic, i.e., “Let’s cut taxes now, and then we’ll figure out how to cut spending.” Then the spending cuts never happen, or at any rate they’re marginal compared to the lost tax revenue. Sometimes I think this is deliberate, or at least it was back in the 80’s, as part of a strategy to discredit and dismantle big government. Now I think it’s just become an election-year tactic. If you’re Republican, you must promise to cut spending and taxes. It’s like kissing babies and finding Jesus. The rumblings beneath Debt Mountain are ignored.

    Prove to me, Senator McCain, that you can get both parties behind real campaign spending reform first (remember that?) and then I might believe that you can make spending cuts happen. But I’ve heard earnest pledges to cut spending since 1979, and it sounds about as realistic to me as the Democratic pledges to eliminate poverty. Reagan made genuine efforts to cut some wasteful spending, including the more egregious forms of corporate welfare, and he found that the job was impossible. And he was elected on a landslide!

    I don’t think McCain will be elected on a landslide.

  4. I always think that government is at it’s best when they leave us alone. Hard to get elected on a platform like that.

  5. Pete Tiarks says:

    The first thing I thought was arbitrage – at a 20% discount, you gotta guess that the smarter/richer/more predatory folks are going to be using it to stockpile and use later and/or sell on.

    Which I s’pose means that you’d have to regulate to stop that, which seems like an expensive waste of time.

  6. Dan says:

    Reagan and W both got elected in large part because they promised they’d make the government “leave us alone.” McCain keeps using that rhetoric too. It’s hard to imagine a Republican getting elected who didn’t. So it’s more than possible to get elected on a platform like that. Carrying it out proves more difficult.

    But that’s not the topic of this thread. The topic is a proposed policy of temporarily dropping the gasoline sales tax and opening up the strategic petroleum reserve for the summer months. And what the impact of such a policy, good or bad, would be.

    It looks to me like an attempt to prop up a sagging economy until the election.

    If this tax is dropped, by the way, and then re-instated, then the Republicans will have hoist themselves on their own petard. Just as they said that an attempt to keep W’s tax cuts from being made permanent would be a “tax increase,” so would a reinstatement of a gas tax.

    One of McCain’s first actions would almost certainly be, therefore, to raise taxes.

  7. Dan says:

    (Assuming that “for the summer months” turns into “until after the election.”)

  8. Mark Murphy says:

    The Strategic Petroleum Reserve (SPR) is already near capacity. According to, the capacity is “727 million barrels”. According to the current inventory (, it is at 701.1 million barrels. We’re buying a couple of million barrels per month, and worldwide oil production appears to be nearly 100 million barrels per *day*. Our SPR purchases are a drop in the proverbial bucket.

    I’ve also heard some calls to release oil from the SPR, and that strikes me as moronic. The SPR is for crises (e.g., Hurricane Katrina), not for political pandering, like short-term market-moving pre-election.

  9. MS says:

    Scarey to think that the media (at least the pundits) believe that McCain can still win this election and lead us further down the path to perdition.

    At the start of Bush’s first term, a parent in my carpool said he was reading Greek history, and found that a Greek government had toppled the Greek economy and world hegomeny in 30 years; he thought Bush would beat that record. I think that he has gone far, and that McCain would finish us off.

  10. Pingback: Phil Gramm on the Spot « Jon Taplin’s Blog

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