I missed this yesterday while in transit, but it’s pleasing, and almost startling, to read something as entertaining as Bryan Caplan’s argument for the McCain gas-tax holiday on the New York Times’ op-ed page, not lately known for the originality of its insights. I disagree with his conclusion, but I enjoy Caplan’s argument that the gas-tax holiday is a reasonably good measure because it will tend to prevent Washington from doing something even more stupid in response to voters’ complaints about gasoline prices. That’s priceless. Caplan writes:
… the tax holiday is a relatively cheap symbolic gesture that makes truly bad policies less likely. The main causes of high gas prices are probably factors beyond our control, like rapid growth in China and India and low real interest rates. But voters don’t want to hear this; they want politicians to “do something!”
During our last big energy crisis, in the 1970s, “something” turned out to be a salad of populist nonsense: price controls, rationing, windfall profits taxes, arcane loopholes and lots of lawsuits. That political response turned an inconvenience into a disaster.
We can do better this time. Since in an election year Congress will feel compelled to show the voters that it feels their pain, let’s do something that at least keeps energy markets in good working order. The tax holiday fits the bill. Markets will adjust to it, no problem. And it won’t cost much — the estimated $9 billion in lost revenue is about $30 per person. That’s not a bad price to pay for a little insurance against a rerun of misguided ’70s measures.