The politicians, the economists and the gas tax

From today's WSJ:

Host George Stephanopoulos -- a former staffer in President Bill Clinton's White House -- quoted Princeton economist and New York Times columnist Paul Krugman, who has written in support of Sen. Clinton's policies in the past but called the [gas tax holiday] idea "pointless and disappointing." Mr. Stephanopoulos then asked Sen. Clinton to name "a credible economist who supports the suspension." Sen. Clinton responded in the populist tone heard in many of her recent stump speeches. "We've got to get out of this mind-set where somehow elite opinion is always on the side of doing things that really disadvantage the vast majority of Americans," she said.

Economics is a tool that informs policy. You can bring your ideological priors to policymaking, but don’t you want to know what the effect of those policies will be?

For the record, here’s Paul Krugman:

Why doesn’t cutting the gas tax this summer make sense? It’s Econ 101 tax incidence theory: if the supply of a good is more or less unresponsive to the price, the price to consumers will always rise until the quantity demanded falls to match the quantity supplied. Cut taxes, and all that happens is that the pretax price rises by the same amount. The McCain gas tax plan is a giveaway to oil companies, disguised as a gift to consumers. Is the supply of gasoline really fixed? For this coming summer, it is. . . . . The Clinton twist is that she proposes paying for the revenue loss with an excess profits tax on oil companies. In one pocket, out the other. So it’s pointless, not evil. But it is pointless, and disappointing.

Basically, when Clinton dismisses the economists, she is saying she doesn’t care what the effect of her proposal is. Let’s get at least that clear.

One other point:  from a public choice perspective, the gas tax is actually a good tax because it is salient to the taxpayers rather than hidden, thereby making the political choice more viable.  Clinton and McCain, like typical politicians, would rather keep the tax under the rug.