May 5 (Bloomberg) -- More than 200 economists, including four Nobel prize winners, signed a letter rejecting proposals by presidential candidates Hillary Clinton and John McCain to offer a summertime gas-tax holiday.
Columbia University economist Joseph Stiglitz, former Congressional Budget Office Director Alice Rivlin and 2007 Nobel winner Roger Myerson are among those who signed the letter calling proposals to temporarily lift the tax a bad idea. Another is Richard Schmalensee of the Massachusetts Institute of Technology, who was member of President George H.W. Bush's Council of Economic Advisers.
The moratorium would mostly benefit oil companies while increasing the federal budget deficit and reducing funding for the government highway maintenance trust fund, the economists said.
``Suspending the federal tax on gasoline this summer is a bad idea, and we oppose it,'' the letter says. Economist Henry Aaron of the Brookings Institution is among those circulating the letter. Aaron said that while he supports Obama, the list includes Republicans and Clinton supporters.
The gas-tax suspension has become a flashpoint in the race for the Democrat presidential nomination between New York Senator Clinton and Illinois Senator Barack Obama. Clinton and Republican McCain tout the proposal as an example of their concern for struggling middle-class families. Obama, who estimated it would save the average driver less than $30, calls the idea a ``gimmick,'' rejecting it on similar grounds as the economists.
Dismiss the Objections
McCain and Clinton dismissed the objections.
``I find people who are the wealthiest who are most dismissive of a plan to give low-income Americans a little holiday'' so they have ``a little more to give to their children and enjoy the summer a little more,'' McCain said today. ``Thirty dollars means nothing to a lot of economists -- I understand that. It means a lot to some low-income Americans.''
Clinton said yesterday on ABC's This Week with George Stephanopoulos that ``I'm not going to put my lot in with economists'' because ``we would design it in such a way that it would be implemented effectively.''
The proposal has been rebuffed by House Democratic leaders including Speaker Nancy Pelosi of California and Financial Services Chairman Barney Frank of Massachusetts.
The environmental group Friends of the Earth endorsed Obama over the weekend and called Clinton and McCain's moratorium proposals ``sham solutions that won't ease the pain at the pump.''
Rivlin, who headed the CBO before running the White House budget office during the Clinton administration, was among the Clinton backers signing the letter.
``I don't have to agree with everything she says, and I think she was wrong on this one,'' Rivlin said in an interview today. ``If anything, we need higher gas taxes.''
To contact the reporter on this story: Brian Faler in Washington at bfaler@bloomberg.net
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