constructing the underdog, part v: gas and class
what we're paying for and what our presidential hopefuls say about it.
by jeffrey d. walker
This article is part of a series intended to foster open discussions on the issues as we get set to elect the next President of the United States. See here for more info on the concept. You're invited to add your two-cents by joining the discussion.
This one is a two-fer; two topics in one column. And after spending the past two months covering Iraq and Israel, it's time I bring it back home and cover topics that in all likelihood impact you directly (given my demographic). This month, I'm talking about gas prices and social security.
They are high. I've seen no source of repute suggesting that they will get much better. Gas for something with a two in front of the decimal point is probably now a thing of the past, and I can surely forget the gas for under a dollar a gallon I got a time or two back in high school.
A poll taken in April indicated that voters were more worried about paying for gasoline than about getting a good-paying job, or paying their rent or mortgage; that same article also offers one of the more concise explanations of gas pricing.
In 2005 it was predicted that gas prices would reach $6 a gallon by 2010, and I'm not sure it will take that long; China had 20 million automobiles in the year 2000, 32 million in 2005, and it is predicted that by 2010 China will have 55 million cars and 100 million by 2020. And don't forget India, where earlier this year Tata motors unveiled the first car for 100,000 rupees (approximately US $2,500). America is competing for gas with brand new middle-classers the world over, and the supply is finite.
Please don't start with the "drill our domestic oil reserves" argument; if we drilled here and all the oil companies agreed to sell that oil exclusively domestically, we face certain embargoes from South American and Middle Eastern oil producers. And, unfortunately, since around 2003 the U.S. has been importing more oil per year that it was able to produce even at peak output in the late 1960s (the U.S. produces at about half of that level today [see this chart, and its related article]). Face it: America's oil-dependence-national-security problem is a permanent nightmare as long as we consume oil.
President Bush was never more correct than when he said that there's no magic wand to lower gas prices. And, reviewing the "issues" pages of our prospective presidential candidates, neither Barack Obama or Hillary Clinton have very clear long-term plans, and John McCain has even less.
Of course, that didn't stop McCain and Clinton from engaging in what can only be described as obvious pandering hopes of votes by proposing a Gas-Tax / Holiday. First of all, suspending the gas tax is like putting a band-aid on a severed finger, and is purported to be roughly $30 saved during the suspension. It will leave the federal government strapped for cash, is environmentally irresponsible, and was rightly opposed by Barack Obama, as was agreed by (among others) New York Mayor, Michael Bloomberg, who stated in an interview that "... this idea of a summer break on gasoline taxes... would help Chavez and Kudafi and people like- other people like that. I don't know why anybody would want to do it. ... McCain and Clinton were wrong. The last thing we need to do is to encourage people to drive more and to take away the monies we need for infrastructure in this country. And that's what reducing taxes does. ... It's about the dumbest thing I've heard in an awful long time from an economic point of view. I don't understand why you think there's any merit to it whatsoever. We're trying to discourage people from driving and we're trying to end our energy dependence. You don't do that- and incidentally, and we're trying to have more money to build infrastructure. All three of those things go- fly in the face of giving everybody 30 bucks a year. The 30 bucks is not going to change anybody's lifestyle. The billions of dollars that we would otherwise have in tax revenues can make a big difference as to what kind of a world we leave our children.
... Obama had it right."
I hate it for us all. But don't fall for pandering politicians' quick-fixes.
This section is more skewed toward my demographic again, and focuses on the Social Security which is taken out of each of our paychecks, but for which we, the 20 to 30 something worker, will probably never see any benefit. While we may be able to ween ourselves off of oil dependency, but unless we quit working (or work for a place that offers a qualifying 457 plan that lets you bypass payments into Social Security), we're stuck paying for it whether it looks like we're getting it back or not.
McCain has the greatest recorded quote on the topic, stating in 2000 that more young people ... believe in Elvis than in getting a Social Security check. Unfortunately, McCain's solution is to embrace President Bush's failed personal savings accounts strategy. To me, that's not fixing the system; that's adding another layer of federal bureaucracy next to Social Security's sinking ship, and anchoring it to the financial market (which is unsteady in its own right).
Obama, on the other hand, has proposed increasing the cap on income attributable to social security taxes. As it stands, we are only taxed on the first $97,000 of our income for purposes of Social Security. More income taxed, more money for Social Security. That makes sense, right?
Hillary Clinton (among others) have countered that an increase in the Social Security tax amounts to a new 'tax on the middle class'. Obama has responded, "Understand that only 6% of Americans make more than $97,000--so 6% is not the middle class--it's the upper class."
Moreover, Hillary has never proposed any workable fix for Social Security per se, and instead focuses on budget concerns more broadly when the topic comes up. Hillary has: "... said consistently that my plan for Social Security is fiscal responsibility first, then to deal with any long-term challenges. We would have a bipartisan commission. ... I do not want to balance Social Security on the backs of our seniors & middle-class families. We have to move back toward a more fair and progressive tax system, and begin to move toward a balanced budget with a surplus."
While I agree that it does makes sense to balance the budget, Hillary's response to Social Security avoids the issue without a solution. I have to assume both that Hillary can balance the budget in today's economy, and then also assume that she thereafter can fix Social Security without a tax increase, though she has offered no example of how she might propose to do that. That's a lot of hope.
Plus, she's calling a single person earning over $97,000 "middle class." I say to that, "get real."
I have to admit it, I think Obama has got these two issues nailed. But what do you think?
A practicing attorney and semi-professional musician, Walker writes for his own amusement, for the sake of opinion, to garner a couple of laughs, and to perhaps provoke a question or two, but otherwise, he doesn't think it'll amount to much.
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IF YOU LIKED THIS COLUMN...
5.21.08 @ 11:21a
I of course enjoy reading how Obama has it correct. Having a "good paying job" would help me with paying for gas and paying for the rent or mortgage....but not having the option of a decent job can make that a moot point.
5.23.08 @ 7:34a
I think Obama is some level of common sense on these issues. The gas holiday thing is plain stupid.
But our Presidential figurehead can't control unchecked pricing and mismanagement. These issues can only be controlled by a full, across-the-board reevaluation and restructuring.
The gas situation reminds me more and more of Enron. As long as the speculators say there's a need for high prices, there will be.
Until the bottom falls out.
5.23.08 @ 10:38a
But our Presidential figurehead can't control unchecked pricing and mismanagement.
I would argue that no one can, because from a realistic perspective, we will never get that across-the-board reevaluation. Because, and this may sound simplistic, people are too greedy.
Big Oil's robber barons will never put the consumer's interests ahead of their own. They will never put the consumer's paycheck ahead of their own. OPEC will not put the world's economic stability (such as it ever is) ahead of its own.
The oil industry has long since moved past the realm of economic management and evolved into that transcendental world shared only by the United States' federal budget. It is a world of imaginary numbers, where mystic accountants have no perception of NOW, because they're dealing with what's going to happen 7, 10, 25 years down the road.
The candidates are right there with 'em; notice on both Obama and Clinton's websites, their goals for reducing oil dependence are all set for 2030. That's great. Except neither will be in office in 22 years, so... where's the impetus?
A couple of years back, Dubya called for us to return to the moon and go to Mars. He knew full well it was nothing he had to sweat, because he'd be out of office long before anyone expected results. (To its credit, NASA is making tangible, if slow progress toward that end.)
Solving the oil crisis is bigger than going to the moon, bigger than going to Mars. It needs to be the new Manhattan Project. The new Apollo Program. It needs to have urgency, and a timetable. And all the players need to understand that there's more than national pride at stake; this is about survival.
I would vote for a candidate who realized that oil dependence is not a glacially-paced progression, but an immediate and critical mission, and challenged the country – and particularly science and industry – to an Apollo-like challenge of reducing American oil dependence by 50 percent in the next ten years. I want programs in place to reward scientists, to encourage high school students to pursue math and science and chemistry, to motivate Big Oil to become Big Energy. I want the nation's automakers to understand that they'll start selling cars again when people can purchase a useful product that doesn't waste money or energy, and that it would behoove them to stop making $23,000 hybrids and start making $8,000 hybrids... or else we're going to be seeing a lot more Tatas on the street.
What candidate is going to step up to that challenge? So far as I've seen, not a one.
5.23.08 @ 4:31p
Sadly, none of them, McCain, Obama nor Hillary, has it right on either of these issues.
While I agree the gas tax holiday was a cheap pander, Obama has not offered any substantive solutions of his own. There really aren't any to offer anyway, short of a major transition to alternative energy supplies that will be costly and painful for many. Nobody runs for president on that platform. That's why you don't see Al Gore in this race. He knows what needs to happen and knows he could never win unless he lied about it.
As far as Social Security goes:
A. The problem is not as severe as people imagine. Social Security is still quite solvent (unlike Medicare), and projected to remain so for many decades.
B. Increasing or removing the cap on taxable earnings, while helpful, is no panacea.
C. $97,000 a year is middle class these days. Werner and I combined make that, and I don’t consider us rich by any means. And we don’t have kids to feed. Sure, the cap is on a single income, but many families have only one breadwinner, and if you are supporting two kids, a mortgage, a car payment and saving for the future, $97K doesn’t go nearly as far as you’d think.
D. The real solution to any future solvency crisis for Social Security is the obvious one--don't give it to everybody. There should be a cap on earnings for recipients of SS. It was meant to be a safety net for those who would retire into poverty, not an entitlement for all. There is no reason why someone should be able to retire at 55 with a few million in investments, a vacation home in the Bahamas and then expect to draw SS. It should be considered an insurance policy against penury, not a tasty bonus to top off a bountiful retirement income.
5.26.08 @ 7:54a
Yes, we can!
6.5.08 @ 12:16p
I couldn't agree more! People need to stop looking to the government to make gas cheaper and start taking responsibility for the situation. Oil is a non-renewable resource - we aren't getting any more of it - we all need to start changing our habits to deal with this issue. I've been taking public transportation to work and walking whenever i can - I only have to get gas about once every 4 or 5 weeks now (in my tiny vw bug). This means that I get to feel good about saving money and lessening my impact on the environment (talk about a win-win situation). On the increasingly rare occasions when i do drive, I'm constantly getting passed by people in giant SUVs going way over the speed limit (despite the fact that you use something like 20% more gas for every 5 mph you go over 60). I suspect these are the same people who think that the government needs to "do something" to make gas cheaper. People need to take their heads out of the sand and figure out what they can do in their own lives to lessen their dependence on oil. While I agree with Russ that the next administration needs to find ways to make hybrid and alternative fuel vehicles more available and affordable, we all also need to take personal responsibility for saving our world. We can't count on the government to get us out of this one.