Economists Say Clinton-McCain Gas Tax Holiday Proposal Would Boost Price of Gas

In her continuing impersonation of a Republican, Hillary Clinton has adopted two perennial Republican tactics: pandering, and calling for tax cuts.

Clinton and McCain have proposed suspending the 18.4 cents per gallon federal gas tax during the summer. The tax funds the Highway Trust Fund used to maintain highways and bridges. Economists noted that, because refineries can't increase their capacity in the space of a few months, suspending the tax would increase demand, benefiting oil companies not consumers.

Eric Toder of the Urban-Brookings Tax Policy Center in Washington told MSNBC "You are just going to push up the price of gas by almost the size of the tax cut."

"This isn’t an idea designed to get you through the summer, it’s an idea designed to get them through an election," Obama said Tuesday in Winston-Salem, NC.

Clinton says she'd pay for the tax holiday with a windfall profits tax on the oil companies, but observers noted that passage of such a measure was unlikely, especially in a short timeframe. McCain has not said how he would pay for the tax cut.

Tufts University economics professor Gilbert Metcalf called the proposal "short sighted" and "counterproductive." And even NY Times columnist and Clinton supporter Paul Krugman derided the proposal. "It’s Econ 101: the tax cut really goes to the oil companies," Krugman wrote.

Newsweek's Jonathan Alter told Air America Radio's Ed Schultz that the proposal would cost 300,000 jobs in discontinued infrastructure projects. "This is beyond bad," he said. "Even Clinton and McCain's own economic advisers know it's a bad idea."