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Media General News Service - Amid Doubts, Graham Defends Gas-Tax Holiday

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Location: Washington, DC


Media General News Service - Amid Doubts, Graham Defends Gas-Tax Holiday

As Memorial Day approaches and with it the start of the summer driving season, U.S. Sen. Lindsey Graham, R-S.C., reiterated his support for suspending the federal gasoline tax — with Graham's office saying the senator is prepared to push legislation through Congress to do just that.

Graham's defense of the proposal comes amid lingering criticisms by analysts, economists and fellow lawmakers who have dismissed the plan as politically motivated and economically unsound.

Along with U.S. Sen. John McCain, R-Ariz., Graham has co-sponsored an initiative to temporarily repeal the 18.4-cent per-gallon tax this summer. That bill would also knock off 24.4 cents per gallon of diesel.

Graham said action is needed to bring drivers some relief from soaring fuel costs.

"At $4 a gallon, it's going to be tough on consumers, particularly those with families," he said. "If you took the federal gas tax off every gallon of gas during the summer, I think it does help people."

Yet opponents of the proposal question who would most likely benefit from dropping the tax.

"The gas-tax holiday will provide little relief to drivers but lots more money to big oil companies," said Daniel Weiss, an energy expert at the Center for American Progress, a Washington think tank.

Weiss said it would be up to service-station owners to decide whether to pass the tax break on to consumers. That means savings at the pump could, in fact, be zero. Even if gasoline prices were to fall, Weiss said, the plan could backfire as lower prices lead to increased demand for fuel. That would just push prices back up, he said.

"It's an attempt at providing short-term relief, but I believe that attempt would likely fail," Weiss said.

Ben Kyer, a professor of economics at Francis Marion University in Florence, said any short-term benefits likely would be offset in the long run.

"What you're going to see is a very, very small decrease in price and an increase in the amount of gasoline" people buy, he said.

As a result, oil imports would have to rise to match demand, which would push up the price of crude oil, Kyer said. That would lead to higher gasoline prices down the road.

"In my opinion, it's very bad economic policy," Kyer said. Graham said he doesn't think the gas-tax holiday would push up fuel costs.

"If we can reduce the (price of a) gallon of gas by lowering the tax, I think it will help consumers and it won't be wiped out by increased demand," he said.
Graham had a stern assessment of the plan's critics.

"Those who say we can't do this or shouldn't do this, I think are disconnected from the real world," he said.

Politicians have sparred over the gas-tax holiday since McCain proposed the idea in April. U.S. Sen. Hillary Clinton, D-N.Y., has voiced her support for the initiative, while fellow senator and Democratic presidential hopeful Barack Obama of Illinois has called it a political gimmick that wouldn't generate real savings for drivers.


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