Liberal, Irreverent

Wednesday, April 30, 2008

Losing respect for Hillary Clinton

I am concerned that Hillary Clinton is really willing to say anything regardless how crazy or irresponsible is just to score a few points with voters. Recently Hillary proposed to suspend the gas tax to help consumers at the pump. However, practically every economist is in agreement that step is a very bad idea. Their reason is logical and anyone who has been in business before will understand it.
When you eliminate a tax that was built-in before, initially the vendors will pass a high percentage to consumers (they will keep a portion to "offset" any administration necessary to comply with the new regulation). But eventually it is the psychology of business that if consumers were paying that high price before, it is already built in the budgets. So, it is just a matter of time (and wouldn't be too long) that all vendors push their prices back to the pre-regulation price. The consumers end up paying the same price and the businesses end up getting new higher profits equal to the amount of the previous tax.
Now, why Clinton would propose that idea? My only guess is that she knows that it resonates well in the ears of the struggling working class to lower their gasoline bills. But she is a smart woman and she has economists in her team that probably would have advice her, but she did it anyway. So, it is my thinking that she prefers say something crazy and irresponsible, just because if sounds well to voters who does not have the same level of understanding. And that is completely irresponsible! These are the type of things that make people lose respect for her as the polls show that she is the candidate that people trust less.

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