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Kerryopoly and John Kerry's phantom gas tax

Today I discovered the very hilarious Kerryopoly game at the Republican National Committee website. It’s funny because the Republicans are supposed to be the party of the rich, and the Democrats the party of the average working stiff, but we find out that the Kerry family owns multi-million dollar residences throughout the nation. Click on one of Kerry’s Monopoly board properties and you hear a funny song clip. When you click on his $9.18 million Nantucket vacation home you hear the theme song to Gilligan’s Island.

Tucked in with his real estate holdings and his $35 million private jet is a box that says that Kerry will impose a fifty cent per gallon gasoline tax and this will cost you $657 per year. Huh, how did that get in there? Isn’t this supposed to be just a funny spoof about how rich Kerry is? Why ruin it by putting in this gas tax stuff?

The GOP has presumably determined that no issue makes voters angrier than a tax on gasoline. I tried to find a Gallup poll or something that supports this hypothesis, without any luck. But I believe it from anecdotal evidence. I’ve floated the idea past regular people. Regular people who are registered Democrats. People go crazy when you mention the idea. “HOW DARE THEY RAISE THE GAS TAX!!!” they say. For some reason people don’t care that federal, state, and local governments claim nearly 40% of their income. As long as the price of gas is cheap, they’re happy.

A Bush Cheney ad released March 30 attacked John Kerry on the gas tax. The ad says, “Some people have wacky ideas. Like taxing gasoline more so people drive less. That’s John Kerry. He supported a 50 cent a gallon gas tax. If Kerry’s tax increase were law, the average family would pay $657 more a year.”

According to FactCheck.org, Kerry only mentioned a fifty cent gasoline tax briefly in 1994 and never proprosed or voted for any such legislation. “Kerry's support was so fleeting that the only evidence of it to surface so far are two old newspaper clips.”

I suspect that what really happened back in 1994 is that one of Kerry’s advisers said, “Kerry you idiot! Don’t you know that supporting a fifty cent gas tax is political suicide?” And then Kerry shut up. Now he no longer supports a fifty cent per gallon gasoline tax.

FactCheck.org also pointed out that the math was wrong. FactCheck.org says this tax increase which neither candidate supports would only cost the average household an extra $598 per year.

Despite the inaccuracies of the television ad, the Republicans are still going with the gasoline tax angle. On June 1, two full months after the television ad was released, the RNC issued a press release about the new Kerryopoly game. Apparently, the most important reason the Republicans can come up with for not voting for Kerry is a gasoline tax that he hasn’t publicly supported since 1994.

Do any of the people who came up with that half-baked television ad have even the least understanding of economics? Is it a “wacky idea” that people will drive less if gasoline costs more? Just the opposite, it’s basic common sense economics! If the price of something goes up, people use less of it. What could be easier to understand?

It is widely assumed that use of gasoline creates externalities. The validity of this assumption is worth examining in greater detail, but for the rest of this essay, let’s just assume that the assumption is true.

According to an economics textbook that I have lying around my apartment, an externality is “an action by either a producer or a consumer that affects other producers or consumers, yet is not accounted for in the market price.” In order words, by driving your car around you’re creating traffic congestion, pollution, and dependence on foreign oil, all of which impose burdens on other Americans, and you’re getting a free ride (no pun intended) because you’re not paying for those external costs. If the cost to others of the externalities is fifty cents per gallon, then a fifty cent per gallon gasoline tax would cause Americans to change their car buying and driving behavior to a more economically optimal equilibrium.

For the reasons explained in the preceding paragraph, Gregory Mankiw, who was appointed by President Bush to be the Chairman of the Council of Economic Advisors, supported a fifty cent per gallon gasoline tax in a 1999 article he wrote for Fortune magazine.

An increase in the gasoline tax is not wacky at all. If you believe that the use of gasoline creates externalities, then a higher gasoline tax is the most sensible policy one could propose. What’s wacky is what’s really in Kerry’s energy plan. Instead of fishing up ten year old newspaper articles, it’s too bad that the guys at the RNC didn’t just visit Kerry’s website and read his real plan. But sadly, they probably did look at the real plan, and decided that attacking the non-existent plan from 1994 would make for a more effective campaign strategy. Getting Bush reelected is more important than promoting sensible energy policies.

So why is the real Kerry energy plan wacky? That's the topic of a future essay.

posted Saturday, June 05, 2004