Thursday, May 01, 2008

Paul Krugman’s Take on Gasoline Tax Relief

Here, Paul Krugman agrees with every other economist on the planet and slams John McCain and Hillary Clinton for supporting a one-off, temporary suspension of the federal gas tax for the summer holidays. He doesn’t use the pander word, but he does call their plans evil (Mr. McCain) and pointless (Mrs. Clinton). Pretty strong words, no?

There are several obvious differences between the U.S. tax cut follies (another Krugman choice) and the one-month suspension in Japan. The following quote from Mr. Krugman’s op-ed happens to lay them out in bold relief:

I don’t regard this as a major issue. It’s a one-time thing, not a matter of principle, especially because everyone knows the gas-tax holiday isn’t actually going to happen.

A caveat here: The DPJ—as with the refueling operations—discovered this matter of principle well after it drew up its manifest. That gives its position something of a makeshift air. Still, it can still showcase itself as a party of substance if it can expose the Fukuda administration’s fiscal reform package as a whitewash of the status quo at the autumn showdown. If the recent behavior of the Fukuda administration and the ruling coalition is any indication, there's a good chance that the proposal will be vulnerable.

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