Obama, Clinton Put Gasoline Tax at Center of Debate
Catherine Dodge
Tue May 6, 9:22 AM ET
May 6 (Bloomberg) — Never before have two presidential campaigns staked so much on 18.4 cents.
Hillary Clinton and Barack Obama are closing out their marathon campaigning in Indiana and North Carolina tussling over Clinton’s proposal to suspend the federal tax on each gallon of gasoline for the summer months, one of the few stark policy differences between the two Democratic presidential candidates.
A bipartisan group of more than 200 economists, including four Nobel Prize winners, signed a statement calling the gasoline-tax plan — also endorsed by Republican John McCain –a “bad idea.” Obama derides it as a “gimmick.” Clinton dismisses the economists and says Obama’s opposition demonstrates he’s out of touch with working-class voters.
The economy, especially energy costs, has moved front and center as the two candidates focused their messages for today’s primaries in Indiana and North Carolina. Both candidates need at least one victory.
“If Obama can’t rack up a comfortable win in North Carolina, questions about his deal-closing ability will intensify dramatically,” Rogan Kersh, professor of public service at New York University, said.
For Clinton “the pressure to drop out will be immense if she loses both of these states,” David Redlawsk, a political science professor at the University of Iowa in Iowa City, said.
Delegate Count
Obama has the lead among the delegates who will eventually decide the nomination, 1,743 to 1,607, according to an unofficial tally by the Associated Press. A candidate needs 2,025 to get the nomination.
Indiana and North Carolina combined have 187 pledged delegates at stake. While a split decision tomorrow would make it almost impossible for Clinton to catch Obama in the delegate count, it would let her continue her fight though the seven remaining contests.
Polls show Clinton has the lead in Indiana 48 percent to 44 percent, while Obama maintains his edge in North Carolina, 50 percent to 42 percent, according to averages compiled by Pollster.com.
To make her appeal to working-class voters, a crucial constituency in the primary and the general election, Clinton is emphasizing an economic populist message.
Along with raising taxes on the wealthy and tougher negotiations with trading partners, Clinton said she wants to “provide some immediate relief” by suspending collection of the 18.4 cents-a-gallon gasoline tax during the summer driving season and taxing oil companies to make up for the lost revenue.
A Summer Break
“Let’s give you a break this summer,” Clinton, 60, told a crowd in Greenville, North Carolina, yesterday.
Obama is making his own populist pitch by skipping the arena-sized venues he’s favored in other states for smaller town- hall-style events. He brought his wife and two young daughters on the trail to be at his side over the weekend when he met with voters, many of them the working-class Democrats who have tended to back Clinton in recent primaries.
He met with a group of construction workers in Evansville, Indiana, yesterday and later flew to North Carolina to address workers at a manufacturing plant.
In most forums, Obama stressed his humble beginnings and urged voters to look beyond race and the recent controversies of the campaign, including inflammatory remarks by his former minister.
Bigger Issues
“The only way a black guy born in Hawaii named Barack Obama can win this race,” the Illinois senator, 46, said over the weekend in Indianapolis, “is if you decide that you’ve had enough of the way things are, if you decide that this election is bigger than flag pins or sniper fire or the comments of a former pastor.”
Clinton campaigned well into the night on primary eve, wrapping up a day of get-out-the-vote rallies in Evansville, Indiana. She continued to hammer recent themes, saying that she is the candidate who best understands the needs of average Americans.
On a day that oil prices hit a record $120 a barrel, she repeated her plan for a gas-tax summer holiday for consumers and vowed to take on oil exporters and market traders that influence energy prices.
The gasoline-tax moratorium emerged as a campaign issue as the two Democrats, who on other issues have offered policy prescriptions with more similarities than differences, tried to contrast the choices before voters.
Temporary Tax
Clinton, a New York senator, proposes making up the lost government revenue through a temporary tax on profits made by oil companies from the rise in crude oil prices, her main difference on the issue with McCain, an Arizona senator who is the presumptive Republican nominee.
With gasoline prices averaging about $3.61 a gallon, Clinton says the move would save the typical family about $70 during the months June, July and August. Obama says the savings would be about $30, a figure supported by independent analysts. Obama backed a state-tax moratorium in 2000 in Illinois and said that showed him it wouldn’t work.
Speaking to reporters on the flight to Evansville, Clinton acknowledged that it’s not likely Congress and President George W. Bush would move to suspend the gas tax.
“Realistically it’s tough,” she said, criticizing members of her own party for not taking a tough stand on behalf of consumers. “They’ve got to feel that Democrats are on their side. They have to know we’re going to bat for them.
Nobel Laureates
Economists including Joseph Stiglitz of Columbia University Roger Myerson of the University of Chicago, both Nobel laureates, and former George H.W. Bush administration adviser Richard Schmalensee of the Massachusetts Institute of Technology signed the statement against the tax holiday. They said it would mostly benefit oil companies while reducing funds available for highway maintenance, the same argument advanced by Obama.
When asked again yesterday whether any economists support the gas-tax suspension, campaign spokesman Mo Elleithee said “finding economists to support this hasn’t been our focus. Our focus is on helping real people by giving them a break at the pumps in a fiscally responsible way.”
To contact the reporter on this story: Catherine Dodge in Washington, at Cdodge1@bloomberg.net
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