George Will sarcastically notes that the fuel-efficient-car-of-tomorrow boosterism is moot now that gas is cheap again:

The two best-selling vehicles in America this year are large pickup trucks (Ford F-Series and Chevy Silverado). In February, Toyota sold 13,600 Tundra and Tacoma pickups and 7,232 Priuses. It sells the Prius at a loss, which it can afford to do because it makes pots of money selling pickups. Has the Car Designer in Chief, a.k.a. the president, considered the possibility that what he calls “the cars of tomorrow” will forever be that?

The American car-buyer likes big cars, regardless of fuel-efficiency. If the president wants Americans to move away from gas profligacy—a position that seems to be politically popular—he might suggest raising the Federal gas tax to make fuel efficient cars more financially attractive. Though I think this is a wise idea eventually (raising taxes right now in a recession is unwise), I still hold that a Congress bowing to popular will (as it typically should) will handily defeat any such proposal.

The public may agree with statements that the country is too dependent on oil, but its behavior suggests the complete opposite.  The Obama energy agenda may not be as popular as he might think.

Suburban living requires lots of driving.  Driving requires gas.  Lots of driving requires cheap gas and thus many exurbs are suffering especially hard right now, says the New York Times.

In a recent study, Mr. Cortright found that house prices in the urban centers of Chicago, Los Angeles, Pittsburgh, Portland and Tampa have fared significantly better than those in the suburbs. So-called exurbs — communities sprouting on the distant edges of metropolitan areas — have suffered worst of all, Mr. Cortright found.

In some ways this is a bittersweet phenomenon because the exurbanites tend to be a mix of the lower-middle class who cannot afford to live closer and the neauveau almost-riche who demand ridiculously large McMansions.  I feel sorry for the former, but little sympathy for the latter.

Americans often believe that cheap gas is a constitutional right. With gas prices as high as they are these days, driving one’s SUV around one’s car-dependent suburb is becoming expensive.

To allay this pain at the pump, both Sen. Clinton and McCain have proposed suspending the Federal gas tax for the summer, a measure expected to draw praise from these motorists. Sen. Obama, however, has rightly described the gas tax suspension as a gimmick that won’t lower gas prices at all. Here are the various reasons why the gas tax suspension is a bad idea:

Ineffective Economic Gimmickry

The problem with this tax suspension, as many notable economists have explained, is that oil refiners and distributors will simply raise prices as the tax drops with hopes that nobody will notice. Furthermore, reduced prices may encourage higher consumption, thus boosting prices back up again.

Today on ABC’s This Week, host George Stephanopoulos asked Clinton “Can you name one economist, one credible economist, who supports this suspension?” (watch the exchange)

Clinton responded,

Well, you know, George, I think we’ve been for the last seven years seeing a tremendous amount of government power and elite opinion behind policies that haven’t work for the middle class and hard-working Americans.

Pressed further to name one supportive economist, Clinton dismissed the need to listen to economists about economic policy:

I’m not going to put my lot in with economists because I know that if we did it right… we would design it in such a way that it would be implemented effectively.

Apparently Sen. Clinton believes she knows better than professional economists about fuel markets. This is another instance where careful, professional economic thought is cast as “elitist” when it doesn’t tell the masses what they want to hear, specifically, that we can have our cake and eat it too.

Failure to Reduce Dependence on Oil

Though Sen. Clinton supports suspending the gas tax, she then goes on to complain about the nation’s dependence on foreign oil. Just how exactly does Sen. Clinton plan to reduce this dependence while opposing drilling in Alaska and making gas cheaper? It is impossible. Though bashing Saudi oil barons has been in vogue for several years, we must recognize that these same barons provide us with what we want: cheap oil. Without increasing domestic production or reducing domestic demand, suspending the gas tax is likely to increase consumption of foreign oil.

Encouraging Environmentally Destructive Behavior

Sen. Clinton cannot support reducing greenhouse gas emissions and support cheap gas. The latter exacerbates the former and in the unlikely event that a gas tax suspension does indeed lower gas prices, such prices will only encourage increased consumption and thus increased greenhouse gas emissions.

Dismissing the “elite opinion” of economists, Sens. Clinton and McCain float this suspension as a populist appeal to middle- and lower-class voters for whom the rise in gas prices has been particularly painful.

Politically, though, these differing positions on the Democratic side highlight a difference in the support base of the two candidates. Clinton’s base, skeptical of the “elite opinion” of economists on issues of free trade and technological innovation, are having trouble affording the drive-everywhere lifestyles to which most suburban Americans are accustomed. Furthermore, despite the green leanings of the Democratic Party, much of Clinton’s base cannot or will not sacrifice to support environmental causes.

Obama’s base, which skews toward the wealthy, has the means to buy hybrids and live in pricey, close-in enclaves where public transport is better and where good jobs are not too far away. Though Obama denies that a tax holiday will lower prices (and he’s likely right on that), it’s far easier for him to say that without alienating his base.

For consumers who actually believe the tax holiday will lower prices, Obama’s refusal to lower the tax smacks of elitism. For those of us educated with some minimal understanding of economics, our “elite opinion” is in Obama’s favor.

All three candidates have promised the impossible: to cut greenhouse gas emissions and to lower the cost of gasoline.

McCain wants a gas tax holiday from Memorial Day to Labor Day. His rationalization is that the slight savings would encourage consumer spending. He also avers that such boosted spending would bring about economic recovery to offset losses to the Treasury. Yeah right.

The Clinton and Obama camps have added an anti-corporate flare to their equally populist proposals, promising gas tax reductions to be compensated by a “windfall profits” tax on “Big Oil,” the Democrats’ favorite bogyman.

But what about the environment? Any gas tax reduction incentivizes consumption of gasoline and thus the production of greenhouse gases. Cheap gas, often mistaken for being listed in the Bill of Rights, is entirely antithetical to curbing greenhouse gas emissions. Like President Bush’s belief that Americans need not sacrifice one bit to pay for war, the Democrats believe Americans need not sacrifice one bit for clean air or to reduce CO2 emissions. They prefer to shift the burden to “Big Oil” and the auto companies, whom they demand to produce more fuel efficient cars. Candidate resort to rhetoric demanding in increase in the CAFE standards, expecting the auto companies to deliver.

Sadly, raising mileage standards is unlikely to reduce emissions anytime soon. Blaming mileage standards does, though, provide politicians with convenient political cover as they shift the burden of environmentalism to car companies. This is unwise for several reasons.

First, raising mileage standards takes years and does nothing to address the emissions of existing vehicles.

Second, the moment a president signs a bill mandating high standards, the auto industry’s lobbyists will shift into top gear, lunching and golfing in full force to dull the bite of any CAFE legislation either by obtaining extensions or all-out waivers.

Third, a high-mileage vehicle, though emitting less CO2 per mile, can still emit an overall large amount if driven frequently.

The simplest and most effective solution is also the least politically popular: increasing the gas tax to act as a carbon tax. This would immediately reduce greenhouse gas emissions since gas consumption would decline as the price rose. However, while the Democrats like to bash the Bush administration for doing precious little to reduce greenhouse gas emissions, they know that the public would not tolerate any intentional increase in gas prices.

Though the president displays a weak commitment to reducing greenhouse gas emissions, his aversion to Kyoto and other initiatives is more honest than the Democrats’ double-talk. He states correctly that the nation is neither willing nor prepared to pay the economic price of reducing emissions. This is true.

Too many Americans believe they are entitled to cheap oil and Democrats and Republicans have long realized that these people vote. Half of Americans live in suburbs, which are notorious for their car-dependency and whose very existence is due largely to cheap gas and free highways. Are the people who drive to the store, to school, to work, to the mailbox—everywhere!— going to appreciate paying $7.00 per gallon? Not likely.

Though one could be mistaken for thinking Monumentality is a Pelosi-bashing outfit, it appears the House majority leader may have the right idea on the housing bills going through the House and Senate.

The New York Times today reports that the Senate version has been compromised by special tax handouts for house builders, airlines, and the automobile industry. Like much of the waste that passes through Congress on its way to the Treasury, lobbyists representing various interests have been able to attach riders to a housing bill whose public support and perceived urgency guarantee its own passage.

The House version lacks these provisions and it is likely Pelosi will try to kill them in the conference committee and rightly so.

The Times describes the Senate bill’s provision for home builders:

In the Senate bill, the nation’s biggest home builders, some now on the verge of bankruptcy, won a provision that would let them claim millions in tax refunds by charging their current losses against the huge profits they made three or four years ago.

Certainly house builders are hurting right now, but so are many other sectors of the economy. House builders are neither entitled nor deserving of special tax treatment: they have reaped bountiful profits the past few years by riding the real estate wave. Prudent builders would have stashed away some profits for years such as this one.

Airlines, though suffering from the high cost of fuel, are the oriental rug stores of corporate America, always claiming to be poised on the brink of bankruptcy. Congress need not intervene for an industry that needs to learn how to run itself profitably, as several carriers do. Furthermore, the solution to higher fuel prices is simple: raise fares and cut service.

The automobile industry faces several challenges. First, the high cost of fuel has driven down demand for SUVs and trucks from the Big Three, whose profitability precariously depends on gas being cheap. When prices rise, their products look less attractive to consumers. The second challenge is falling consumer demand due to decreased consumer confidence. Low confidence is compounded by the fact consumers are finding it harder to obtain credit for such expensive purchases. Additionally, the Big Three face extraordinary pension liabilities resulting from ill-considered benefits promised decades ago. Most of these problems are not new.

With such popular demand for government action in the face of declining housing prices, it is hard for Congressmen to refuse to act. Unfortunately, it’s also hard for lobbyists to refuse to act.