Why Does the DNC fear Democracy?

I used to enjoy the lead ups to conventions.  This was especially true when I was much younger and they had less of an advertising feel and more of a rough and tumble display of democracy-at-work.  I actually enjoyed watching both Teddy Kennedy and Jesse Jackson try to pull stunts, and then the Ford-Reagan Republican struggle was classic.  I enjoyed watching Pat Buchanan make trouble and think I really got the message of how dangerous the religious right was during the convention that featured Pat Robertson prominently.   I think it was how I became addicted to politics they way many folks do to sports.  I remember watching all the old great news anchors, the balloons falling (all originally in black and white) and the silly hats and outfits.

Now conventions seem to have originated more from Madison Avenue than from Philadelphia and James Madison.  The DNC’s attempt to make this convention go as smoothly as possible for Obama has been farcical.  An extremely close primary outcome has–in the past–led to a very fractious convention.  The DNC is doing everything in its power to stop dissent and suppress the true workings of democracy.

I continually feel the need to say this to any one that will listen:  NO ONE PERSON GOT ENOUGH DELEGATES IN THE PRIMARY/CAUCUS PROCESS TO WIN THE DEMOCRATIC NOMINATION.  There is only a presumed winner.  There are no losers yet, other than perhaps the 18 million Democratic voters who are being tossed aside like road kill on a hot Louisiana highway.

Today’s CNN is just awash with the misinformation of winners and losers.  This from Jack Cafferty, curmudgeon of the Obama Cheerleading squad:

A humorless organization called “The Denver Group” ran an ad in a Capitol Hill newspaper demanding that Hillary’s name be placed in nomination at the convention and demanding that speeches be allowed in support of her nomination. They’re just full of demands.

And if they don’t get their way they are threatening a revolt. The ad says, “Will Howard Dean and the DNC turn the Democratic Party into the Boston Tea Party?” More demands. They demand a roll call vote on her nomination… presumably after those speeches they are demanding. This despite the fact that she lost and dropped out of the race months ago.

http://caffertyfile.blogs.cnn.com/2008/08/12/placing-hillary%E2%80%99s-name-in-nomination/

Cafferty calling the Denver Group humorless is about the definition of the pot calling the kettle black. Why is the press so willing to go along with subversion of the process?  I would think, at the very least, they would love their ratings if the convention would turn into a floor fight.  There have been MAJOR floor fights and the Democratic and Republican Parties have both survived just fine.  Both President Roosevelts are products of floor fights.  Teddy Kennedy had NO problem with floor fights when it was HIS name in nomination.   What is the deal with putting on a convention that every one knows markets a false unity?

The DNC and the Obama campaign have done everything in their power to trivialize Obama’s detractors. PUMA has been marginalized by the DNC as “Republican” phenomenon, a “New York” driven phenomenon, a group of “bitter-enders” from the Clinton camp and other more horrible names mostly having to deal with being racist or being a middle aged woman.  Can’t they just admit that the presumed nominee has serious flaws, began losing races after the Wright and Ayers associations came out, doesn’t appeal to blue collar voters, Jewish Americans, the elderly, older married women, and Catholic voters and figure out something to do OTHER than cover it up with folks bussed in from Illinois to fill a football stadium?

At a time when the polls are showing clear advantage to democratic candidates, why can’t the top of the ticket get over the 50% mark?  Why is Obama in a dead even race with an elderly republican white man, well-known for anger problems and pretty much party of the Republican party elite?  And quit saying RACISM as an answer for everything!  It’s deeper than that.

We need an OPEN, REAL democratic convention where every one can get their issues and agendas out on the table.  We do not need a suppression of democratic voices so that Obama’s massive ego can be fed and his small niches of constituents appeased like some group of demigods.

In another section of CNN’s site, this is posted:

It was a lot more common in the early days of the modern primary era. In 1972 (the first year when primaries, not conventions, determined the nomination), six losing candidates had their names placed in nomination at the Democratic convention.

In 1976, three unsuccessful candidates (including Brown) were placed in nomination at the Democratic conclave.

It didn’t happen at all in 1980. (Sen. Edward Kennedy, who ran against President Carter in the primaries, didn’t place his name in nomination; Rep. Ron Dellums of California, who was not a candidate in the primaries, did.) Former Vice President Walter Mondale’s two main opponents in the 1984 primaries — the Rev. Jesse Jackson and Gary Hart — both went through the process that year, and Jackson did it again at the 1988 convention after losing to Michael Dukakis in the primaries.

Overall, between 1972 and 1992, 10 Democratic candidates who lost the nomination in the primaries went on to have their names formally placed in nomination at the convention. Significantly, however, none of them publicly endorsed their opponent months before the convention, as Clinton did in June.

http://www.cnn.com/2008/POLITICS/08/12/clinton/index.html?iref=werecommend

There is some real historical perspective in this piece.  Pep rallies for presumed nominees are not the purpose of national party conventions.  To try to subvert the political process into a marketing campaign for a candidate who is clearly NOT a consensus candidate is not only disingenuous, it is unspeakably un-American.

The democratic party and its leaders are coming perilously close to spawning a third party.  They are putting their fingers in their ears and singing la-la-la, while millions of democratic voters are speaking truth to them.  They trivialize us at their very peril!  Unless, they let all the crap they let go on during this election process float its way up to the top of the septic tank during the convention, they are going to be awash in the stink of suppressing voters for a long time.  By forcing unity, they are increasing the chances of a permanent schism within the progressive community.  One that a damaged, but still functional Republican party will run through with vehemence.

It is time to open the process up to democracy and let it work.  This is the only American and democratic thing to do.  We will not shut up and go away and you better be prepared to deal with it now or for a very long time.


Georgia on my Mind

Russian tanks are pushing farther into the Georgian Republic while the U.S. scrambles to airlift Georgian troops out of Afghanistan back home.  It seems the young republic has been cut into half.  U.S. citizens are being evacuated.  While the Russians deny any desire to occupy the country, it appears that diplomacy is required.  There have been many calls for cease fires but the Russians are not reacting to any proposal.

Meanwhile, Barack Obama is vacationing in Hawaii.

All of this couldn’t be better news for the McCain Campaign.  The Obama campaign’s first press release over the Russian invasion was a bit too much we are the world.  He ‘strongly’ condemned the ‘outbreak of violence’ and asked for restraint from both Georgia and Russia.

“I strongly condemn the outbreak of violence in Georgia, and urge an immediate end to armed conflict. Now is the time for Georgia and Russia to show restraint, and to avoid an escalation to full scale war. Georgia’s territorial integrity must be respected. All sides should enter into direct talks on behalf of stability in Georgia, and the United States, the United Nations Security Council, and the international community should fully support a peaceful resolution to this crisis.”

I’d just like to say Senator Obama, if some one invaded and or bombed the United States that I would hope we wouldn’t show restraint. I’d hope we’d kick the invaders into the next dimension. Also, if attacking a sovereign nation isn’t an act of full scale war, what is?

Obama responded later with a more strongly worded statement that finally identified there was a bad guy in this conflict.

“I condemn Russia’s aggressive actions and reiterate my call for an immediate ceasefire… Russia must stop its bombing campaign, cease flights of Russian aircraft in Georgian airspace, and withdraw its ground forces from Georgia.”

This has led to callbacks to Senator Clintons’s ad about that phone call came at 3 a.m. It  appears the final Obama approach comes 24 hours after the call with revision.  This re-statement moment had the feel of the my pet goat moment after 9-11 and the McCain Camp is said to be salivating over drawing similar analogies.

Contrast with McCain’s Statement below:

STATEMENT BY JOHN MCCAIN ON THE CRISIS IN GEORGIA
For Immediate Release Contact: Press Office
Monday, August 11, 2008 703-650-5550
ARLINGTON, VA – Today, in Erie, Pennsylvania, U.S. Senator John McCain delivered the following statement regarding the current conflict between Georgia and Russia:

“Americans wishing to spend August vacationing with their families or watching the Olympics may wonder why their newspapers and television screens are filled with images of war in the small country of Georgia. Concerns about what occurs there might seem distant and unrelated to the many other interests America has around the world. And yet Russian aggression against Georgia is both a matter of urgent moral and strategic importance to the United States of America.

“Georgia is an ancient country, at the crossroads of Eastern Europe and Central Asia, and one of the world’s first nations to adopt Christianity as an official religion. After a brief period of independence following the Russian revolution, the Red Army forced Georgia to join the Soviet Union in 1922. As the Soviet Union crumbled at the end of the Cold War, Georgia regained its independence in 1991, but its early years were marked by instability, corruption, and economic crises.

“Following fraudulent parliamentary elections in 2003, a peaceful, democratic revolution took place, led by the U.S.-educated lawyer Mikheil Saakashvili. The Rose Revolution changed things dramatically and, following his election, President Saakashvili embarked on a series of wide-ranging and successful reforms. I’ve met with President Saakashvili many times, including during several trips to Georgia.

“What the people of Georgia have accomplished – in terms of democratic governance, a Western orientation, and domestic reform – is nothing short of remarkable. That makes Russia’s recent actions against the Georgians all the more alarming. In the face of Russian aggression, the very existence of independent Georgia – and the survival of its democratically-elected government – are at stake.

“In recent days Moscow has sent its tanks and troops across the internationally recognized border into the Georgian region of South Ossetia. Statements by Moscow that it was merely aiding the Ossetians are belied by reports of Russian troops in the region of Abkhazia, repeated Russian bombing raids across Georgia, and reports of a de facto Russian naval blockade of the Georgian coast. Whatever tensions and hostilities might have existed between Georgians and Ossetians, they in no way justify Moscow’s path of violent aggression. Russian actions, in clear violation of international law, have no place in 21st century Europe.

“The implications of Russian actions go beyond their threat to the territorial integrity and independence of a democratic Georgia. Russia is using violence against Georgia, in part, to intimidate other neighbors – such as Ukraine – for choosing to associate with the West and adhering to Western political and economic values. As such, the fate of Georgia should be of grave concern to Americans and all people who welcomed the end of a divided of Europe, and the independence of former Soviet republics. The international response to this crisis will determine how Russia manages its relationships with other neighbors. We have other important strategic interests at stake in Georgia, especially the continued flow of oil through the Baku-Tblisi-Ceyhan pipeline, which Russia attempted to bomb in recent days; the operation of a critical communication and trade route from Georgia through Azerbaijan and Central Asia; and the integrity and influence of NATO, whose members reaffirmed last April the territorial integrity, independence, and sovereignty of Georgia.

“Yesterday Georgia withdrew its troops from South Ossetia and offered a ceasefire. The Russians responded by bombing the civilian airport in Georgia’s capital, Tblisi, and by stepping up its offensive in Abkhazia. This pattern of attack appears aimed not at restoring any status quo ante in South Ossetia, but rather at toppling the democratically elected government of Georgia. This should be unacceptable to all the democratic countries of the world, and should draw us together in universal condemnation of Russian aggression.

“Russian President Medvedev and Prime Minister Putin must understand the severe, long-term negative consequences that their government’s actions will have for Russia’s relationship with the U.S. and Europe. It is time we moved forward with a number of steps.

“The United States and our allies should continue efforts to bring a resolution before the UN Security Council condemning Russian aggression, noting the withdrawal of Georgian troops from South Ossetia, and calling for an immediate ceasefire and the withdrawal of Russian troops from Georgian territory. We should move ahead with the resolution despite Russian veto threats, and submit Russia to the court of world public opinion.

“NATO’s North Atlantic Council should convene in emergency session to demand a ceasefire and begin discussions on both the deployment of an international peacekeeping force to South Ossetia and the implications for NATO’s future relationship with Russia, a Partnership for Peace nation. NATO’s decision to withhold a Membership Action Plan for Georgia might have been viewed as a green light by Russia for its attacks on Georgia, and I urge the NATO allies to revisit the decision.

“The Secretary of State should begin high-level diplomacy, including visiting Europe, to establish a common Euro-Atlantic position aimed at ending the war and supporting the independence of Georgia. With the same aim, the U.S. should coordinate with our partners in Germany, France, and Britain, to seek an emergency meeting of the G-7 foreign ministers to discuss the current crisis. The visit of French President Sarkozy to Moscow this week is a welcome expression of transatlantic activism.

“Working with allied partners, the U.S. should immediately consult with the Ukrainian government and other concerned countries on steps to secure their continued independence. This is particularly important as a number of Russian Black Sea fleet vessels currently in Georgian territorial waters are stationed at Russia’s base in the Ukrainian Crimea.

“The U.S. should work with Azerbaijan and Turkey, and other interested friends, to develop plans to strengthen the security of the Baku-Tbilisi-Ceyhan oil pipeline.

“The U.S. should send immediate economic and humanitarian assistance to help mitigate the impact the invasion has had on the people of Georgia.
Our united purpose should be to persuade the Russian government to cease its attacks, withdraw its troops, and enter into negotiations with Georgia. We must remind Russia’s leaders that the benefits they enjoy from being part of the civilized world require their respect for the values, stability and peace of that world. World history is often made in remote, obscure countries. It is being made in Georgia today. It is the responsibility of the leading nations of the world to ensure that history continues to be a record of humanity’s progress toward respecting the values and security of free people.

“Thank you.”

John McCain’s strongest polling numbers have come from his credentials in foreign policy.  He’s been talking tough and inferring prescience with past discussion of distrust of Putin’s Russia.  One of my favorite McCain moments was him making fun of the President’s having looked into Putin’s eyes and his soul.  McCain said all he saw in Putin’s eyes was KGB.   McCain has been 9% up in the polls above Obama in the belief that he could do better in times of a foreign policy crisis.

While the Obama campaign is now relying on Bill RIchardson to speculate on the Obama approach to this world crisis on TV, McCain’s been on TV directly talking tough.  This can only make Obama look more Dubya-like as they announce he’s getting ‘briefed’ on the situation.  Hawaii, however, makes for a more exotic background than the Crawford Ranch Texas.

This could be the opportunity McCain needs to solidify support among independents and conservative democrats who are traditionally swayed by issues of national defense.  The need for knowledge of the geopolitical history as well as the diplomatic approaches used from administration to administration has never been more keenly brought into focus. The difference in experience between the presidential candidates is at full contrast.  I remember watching the Democratic Debates and being fascinated by the detail at which several of the Senators could come up with plans and answers.  When we got to the one-on-one debates, it became amazingly obvious that Hillary got to answer the wonky foreign policy questions while Obama just sat and waited to respond, mostly with well, I agree with Senator Clinton.  These were the moments immortalized in the SNL debate skits.  For me,  they were the defining moment when I said, I could never vote for Obama for president.  Now, we’re at another one of those watersheds.  Perhaps Obama will just go walk on to the Georgian battle field and spread the hopium, then the skies will open, rainbows will appear, and a heavenly host will lead us all in good rousing verse or two of Kumbaya.


Hurricane Obama vears away from New Orleans!

There’s a big anniversary coming up in my life.  It was about three years ago a little low pressure wave left the coast of Africa that later would change my life and my neighbor’s lives for ever.  Hurricane Katrina was an experience I wouldn’t wish on any one.  Most levels of government have been trying to make nice to us to make up for the horrid response we got following the disaster.  While the kat house didn’t flood and sustained minor wind damage, I can tell you I will NEVER be the same person after that experience.

So, here’s some news from the ninth ward home front.

First, New Orleans put in a pitch to hold the presidential debates and we were rejected because the deciders on the committee said we weren’t ready for prime time yet.  So, Google and New Orleans got together to sponsor a town hall meeting here to highlight New Orleans three years after Katrina nearly wiped us off the face of the map.  We still need exposure and tourist dollars.  So, it would make a nice gesture to do something here, right?  So first, local item is hot off the Greta Wire:

The New Orleans Snub By One Presidential Candidate???

Just in: I was just tipped off that New Orleans (yes, the unfortunate home of Hurricane Katrina…) invited Senator McCain and Senator Obama to do a town hall meeting co-sponsored by New Orleans and Google. As you might imagine, with all that has happened with Katrina, New Orleans is doing all that it can to attract Presidential candidates, commerce etc to help rebuild and revitalize the area.

Senator McCain accepted the New Orleans / Google town hall meeting 6 weeks ago…and Senator Obama? Well..he just answered yesterday and he declined ….the reason? his campaign says he will agree only to do the Commission on Presidential debates….

If  Louisiana is considered by the DNC to be a swing state right now, and New Orleans is the epicenter of Democrats in the state, this is not getting off on the right foot.  This will come right after the snub to visit us for Tavis Smiley’s State of the Black Union during the primary.  I’m not sure if he’s just taking the AA community down here for granted but I’m going to be interested in reading local responses to this.

The next interesting thing was Senator Landrieu’s huge move to disassociate herself from the Obama campaign as reported by Marc Ambinder.  Landrieu stayed neutral for a very long time in the national race.  She knows how much she owes to Hillary Clinton and depends heavily on Clinton-type voters around the state for her seat. She also depends heavily on AA voters.  Her opponent saw an opportunity to link her to the campaign and readied some negative ads.  He’s been running some doozies on her.

http://marcambinder.theatlantic.com/archives/2008/08/landreiu_keeping_some_distance.php

Landrieu Keeping Some Distance From Obama

06 Aug 2008 01:43 pm

Heartbroken Bush campaign ex-officio Matthew Dowd wrote on ABC News.com recently that Barack Obama was running behind his party nationally and therefore that the party’s congressional candidates ought to be wary about running with him.

Sen. Mary Landrieu is keeping her distance.

l1.JPG

Last Thursday, an automated Google search for “Mary Landrieu,” produced a link to a page on Obama;’s website touting an upcoming Washington, D.C fundraiser for Obama. An aide to John Kennedy, Landrieu’s Republican challenger, sent it to reporters. Just two hours later, the link went down, only to reappear with Landrieu’s name removed without notice.

Co-hosting presidential fundraisers are among the most vetted events on any politician’s calendars – sitting senators don’t “accidentally” let themselves get listed as a co-host  for a presidential fundraiser. So far as I am aware, Landrieu has not attended a political event with Obama.

l2.JPG

A Landrieu spokesman e-mails:

The Obama event is part of a day-long series of DNC events focused on women’s political involvement.  Sen. Landrieu is scheduled to attend the event as part of the day-long series of events, but is not hosting.  She was never scheduled to host, so we imagine that somebody made an error and accidently listed her as a host.

If Obama is counting on Lousiana for its electoral votes, I’d say this is a development that should give him pause.

Meanwhile, here’s some of my Katrina Pictures to remind you of the pain we’ve been through down here.

Lower Ninth Ward.
More Lower Ninth Ward

More Lower Ninth Ward--Fats Domino's House

These are from the Lower Ninth Ward which is right across the Canal from me.  My 18 year old daughter –then 15 took these pictures.  Emily put together a montage to take to Nebraska to share with folks up there.  Just about every thing you see here is now gone.  The ninth ward is basically weeds and cement slabs with a few stairs to no where.

Who Really Supports the Bush-Cheney Energy Plan?

John McCain seems to be gaining traction on Barack Obama in a large part due to the energy crisis.  Senator Obama stumbled by suggesting that we could save the amount of fuel generated by new off-cost drilling simply by maintaining the correct tire pressure for our cars. I remember this energy saving tip was provided as a public service announcement by Mario Andretti back in the day.    For some one who is running to solve some of our country’s biggest problems, it simply didn’t seem too, well presidential. It seems more like a topic for Hints from Heloise.

The Obama campaign must have gotten the message that these household hints during speeches aren’t a substitute for specifics on national energy policy when the McCamp camp started handing out tire gauges with ‘Obama’s energy plan’ emblazoned on the sides.  Obama immediately responded with both an ad and a very long speech.  The few specifics layed out by the plan aren’t very earthshattering. I already attacked one of his suggestions as simply bad economics in my blog yesterday.  Any tax placed on the sellers of a price-sensitive product will be passed on immediately to the buyers.  So, the suggestion of a $1000 tax rebate to the taxpayers based on windfall profits will just eventually come from higher prices at the pump.  So, you get a rebate with one hand and you get higher gas prices with the other hand.  Since we’ve never seen an Obama transcript, I’ll just have to speculate that he never took Economics 101 or 102.  I should know because I’m a professor of economics and I teach those classes.

I reviewed Obama’s ad yesterday and found one attack on McCain.  This was the charge that McCain is simply supporting the Bush-Cheney Energy plan.  I checked into the voting records for the 2005 Bush Cheney Energy plan and found something astounding.  McCain voted against it.  Obama voted for it.  It didn’t take long for McCain to pick up on this.  i heard a McCain speach today in Lima, Ohio pointing out that Obama voted FOR the Bush-Cheney Energy plan while he voted against it.  The Bush-Cheney Energy plan was generally seen at the time as a series of huge handouts to petroleum interests.   So, how is it that Obama voted for it and McCain voted against it?

McCain policy advisor Dough Holtz-Eaken had this to say in a press release reprinted by the Chicago Sun-Times.

While distorting John McCain’s vision for energy independence, Barack Obama is also misleading the American people when he says John McCain supported the Bush-Cheney energy policy. Let there be no mistake: the only candidate who voted to give tax breaks to Big Oil is Barack Obama when he supported the 2005 Bush-Cheney energy bill that gave $2.8 billion in subsidies to the oil companies. John McCain voted against this bill for the very reason that he opposed these tax breaks to oil companies and as president he will ensure their repeal. While he may decry them on the campaign trail, Barack Obama had no problem standing side-by-side with the oil companies while in the United States Senate.

http://blogs.suntimes.com/sweet/2008/08/mccain_policy_advisor_doug_hol.html

I’ve seen the ad playing on CNN.  This has to be a misstep by the Obama campaign.  Why would you actually bring attention to such an obviously questionable charge?  A quick check of campaign contributors also shows that Obama has also taken a lot of money from Big Oil as has the McCain campaign.  Why would you charge your opponent with being in the pocket of big oil with such an obvious elephant in your own room?  (And this could be that Obama, at the time, voted more Republican than McCain) Senator Obama must think the press will cover for him by not pointing out the obvious about the contradictions in his behavior and campaign rhetoric.

Taking on high oil prices is going to play much better in Peoria and Omaha than giving speeches in front of German Victory monuments shouting out with “I am a citizen of the world”.  I can really see a McCain ad coming with this contrast set out for those of us living in the big fly over.

Once again, we see the Audacity of Hype.

The McCain Ad:

and the Obama response:

Again, linking McCain to the Bush-Cheney Energy plan when McCain voted against it and Obama voted for it, seems an odd tactic.  I think this will back fire big time if there’s actually some discussion of the facts-on-the ground.  I’m sure the RNC is just waiting for the DNC convention to nominate this clearly in-over-his head candidate before the attack ads start in full.

Please, delegates, run away from an Obama nomination as quickly as possible.


Obama’s Gas Tax Rebate: A flip flop that’s just Bad Economics

I was some what surprised that Senator Obama proposed rebating consumers $1000 for gas purchases given that he heavily criticized both Senator Clinton and Senator McCain for this just months ago.  He criticized their plan as simple gimmicks that pandered to voters.  Well, it was probably just more symbolic than effective, but at least it did no harm.

Senator Obama’s suggestion appears to have a punishing impact on oil companies which I suppose has an added pandering punch.  My 18 year-old freshmen, first year, macro-economics students could tell you why this is just plain bad economics  If you take $1000 per consumer in taxes from Oil Companies and think you give it to consumers and it stops there, you need to go take some college economics.  This is a complete no-brainer that any entry level micro or macro student should be able to shoot down.  I’m going to try to explain this to you intuitively so you can shoot it down too.  I promise I’ll avoid the supply and demand curves in the process.

Any time you place a tax on a good or service, it is important to know how sensitive the demand for that good or service is to price changes.  This concept is called ‘elasticity’ of demand in microeconomics and it is one of the first things you learn as an entering freshmen in your economics 101 classes.  The demand for some goods are quite price sensitive and others are not.  It’s really dependent on a number of things, but the bottom line is just this:  Is it easy to live with out this good?

Perhaps the most price sensitive good is a drug that you are either addicted to or need to live.  There is absolutely no price that will stop you from demanding that good because it means death or extreme withdrawal.  This is why drug dealers frequently give their drugs away to start with, then gradually increase the price.  They know once your hooked, you’ll give up every thing else to maintain the high and eventually even steal or prostitute yourself to earn the money to by the drug.  If you’re a diabetic and you need a certain level of insulin to stay alive, you will have to do the same. You will die without the drug so consuming other goods and services come after what you have to do to pay for the insulin.

Oil does not have the same price sensitivity as an addictive drug or a drug you need to live, but in the short run, it is very price sensitive.  This is because most folks need to drive to get to their jobs, schools and errands.  You can’t just change to a more fuel efficient car immediately, because that is very expensive, so you have to adjust your behavior to pay for the increased cost of gas.  First you try to drive less.  Then you start giving up other things to buy the gas.  Still, you’re stuck with a certain number of miles you have to drive.  At that point, you just have to suck it up and pay for the gas.

If you tax these price sensitive goods, it’s just like raising the price of them.  This is because there is a certain amount the consumer must buy.  They are stuck with whatever cost the seller wishes to charge which can include a large portion of a tax placed on the seller. The tax on goods with demand that is insensitive to price just basically causes an increase in cost passed to the consumer.  This also means if there is a tax placed on the provider of this price insensitive or “inelastic” good, it is very easy for that provider to pass that tax on to the consumer.  This is because the consumer basically will not have that many alternatives other than to suck it up and buy that same amount of gas every week.  The consumer will have to forgo other goods and will put more of their income towards buying gas.

This is what will happen if Senator Obama’s gas tax on Oil Companies would come to fruition, which is highly unlikely even with a very democratic senate.  The cost of the tax to the producers will just be passed on to the consumers of gasoline in the form of higher prices. This means soccer moms, truck drivers, and truck fleets delivering goods to your local stores.  You may get the $1000 back in a check, but you will pay for it every place else in higher prices. How much that higher price is will depend on the sensitivity of your demand to that good.  For necessary items like gas and food, it will be a lot.  For goods you can live with out, like luxury items, it will be less.  So what this really does is transfer the ‘burden’ of the tax to the heavy users of the most necessary items.

I could use fancy graphs and models to show you how much this would cost.  I’m assuming probably some economists are doing this somewhere and you will hear shortly about the numbers they’ve come up with.  However, I just hope you’ll understand on a very basic level what a very bad idea this is; no matter how appealing it sounds.

I have to tell you that I do not have any sympathy for gas and oil companies which enjoy near monopoly power with a very price insensitive good.  I believe we need to do something with their market structure or place some demands on them if we grant them more drilling rights. However, the idea of taxing them to rebate money to consumers is not a good one.  In the long run, it’s just going to cost you and me.  It’s basically just giving with one hand and taking with the other.