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McCain 'gas-tax holiday' is a campaign retread

If it seems like there’s something familiar about the gasoline tax “holiday” being proposed by Republican presidential contender Sen. John McCain, there is.
Image: Bob Dole and John McCain
In September 1996, Republican presidential candidate Bob Dole, left, was joined by his ally Sen. John McCain, R-Ariz., at the American Legion's convention in Salt Lake City.David Ake / AFP-Getty Images file

If it seems like there is something familiar about the gasoline tax “holiday” being proposed by Sen. John McCain, there is.

You may have heard the Republican presidential nominee propose something similar before — 12 years ago when the GOP nominee’s name was Dole, not McCain.

And more recently, New Jersey Democratic Sen. Bob Menendez, running for election in 2006, proposed the “The Menendez Federal Gas Tax Holiday Amendment,” which would have removed for 60 days the 18-cents-per-gallon federal tax on gasoline and the 24 cents-per-gallon tax on diesel.

What Menendez urged in 2006 is what McCain advocated Tuesday in his speech in Pittsburgh.

“I think high gas taxes are a regressive tax," McCain told CNBC's John Harwood in an interview Tuesday. "The people who drive the furthest are the lowest income Americans. It is incredibly regressive. Where's the fairness there?”

April inspires gas tax cut ideas
Menendez, McCain, and Bob Dole all proposed their tax cuts in April of an election year.

There’s something about the month of April that inspires candidates to think of a voter-pleasing cut in fuel taxes: Many voters are beginning to plan their summer road trips to Grandma’s house or to Yellowstone.

Menendez would have paid for his tax holiday by a windfall tax on oil company profits. McCain’s tax holiday is part of larger tax cut package offset by eliminating earmarks, suspending most discretionary spending, and requiring high-income Medicare beneficiaries to pay more for prescription drugs than less-wealthy people.

McCain also proposed suspending deliveries to the nation's Strategic Petroleum Reserve, another idea which sounds familiar. In April of 1996 President Bill Clinton, running against Dole, announced the government would sell about 12 million barrels of oil from the Strategic Petroleum Reserve (SPR) to help ease gasoline prices.

Defending the McCain idea Tuesday was his senior campaign advisor Charlie Black, a veteran Washington operative who also served as senior strategist for the ‘96 Dole campaign.

“I don't think it's different (than Dole's plan),” Black said. “We know that in the summer gas prices peak and it's when people do a lot of traveling, so if you give them a break just from Memorial Day to Labor Day... if you could do it even just for those three months, it would give people some short-term benefit on inflation.”

Back in 1996, when Dole pushed his tax cut and Clinton sold oil from the SPR to ease drivers' pain, the average U.S. price of gasoline was about $1.36 a gallon, about 14 cents higher than a year before, according to the Associated Press.

Today, according to the U.S. Department of Energy, the price averages $3.39 per gallon, up 51 cents from last April.

An ill omen?
The ill omen for McCain here is that the proposed cut in the gasoline tax didn’t help Dole defeat Clinton in 1996.

In fact Dole, having touted the idea of a cutting gasoline taxes by 4.3 cents per gallon in April of '96, eventually tossed the idea overboard in August, when he offered a new package of tax cuts.

(The 4.3 cent-per-gallon increase in the tax had been passed as part of Clinton’s economic plan in 1993, when cutting the federal budget deficit was the order of the day.)

Donald Rumsfeld, serving as a top policy adviser to the Dole campaign, told reporters in August 1996 that Dole dropped the gasoline tax cut in favor of proposing big reductions in income and capital gains taxes.

Rumsfeld said Dole was focusing on “the big pieces, namely growth in this economy and the circumstances of the American workers.”

Rumsfeld's implication seemed to be that cutting the gas tax by four cents a gallon was pretty small potatoes.

Scolding Dole in 1996
And some in the oil and gas industry scolded Dole for thinking too small.

“If he wants to distinguish himself from Clinton, he should remind people of what the President — urged on by his hyper-environmentalist Vice President (Al Gore) — wanted to do to them with fuel taxes (a 50 cent per gallon increase in taxes), not what he settled for (a mere 4.3 cent-per-gallon tax hike),” said an editorial in the trade publication The Oil and Gas Journal in May ’96.

As Gore recognized back in 1993, higher gasoline prices would encourage conservation and research on non-carbon-based fuels. But since then both Democrats and Republicans alike have been loathe to acknowledge that higher prices could play a useful role in spurring conservation.

When Vice President Cheney famously said in April of 2001, "Conservation may be a sign of personal virtue, but it is not a sufficient basis all by itself for sound, comprehensive energy policy," Democrats lambasted him.

But even Democrats critical of Cheney's remark still recall that Clinton's 1993 gasoline tax hike cost Democrats seats in the 1994 elections, when they lost control of Congress.

Democrats on Capitol Hill today are nearly unanimous in calling for lower gasoline prices, not higher ones, as Gore was advocating in 1993.

What's changed since 1993
While McCain's gas tax holiday idea has a deja vu feel about it, a fundamental political change since 1993 is the increasing prominence of an issue that only Gore and a few other national politicians cared about back then, carbon dioxide emissions.

Underscoring this point, Rep. John Dingell, D- Mich., chairman of the House Committee on Energy and Commerce, said Tuesday he was withdrawing his previous proposal for a 50 cent-per-gallon increase in the gasoline tax as a way to curb global warming.

"I simply cannot support these policies at a time when families in my district are dealing with record gas prices, high levels of unemployment, a home foreclosure crisis and rising food costs," Dingell said.

And the McCain proposal seems to run contrary to McCain’s oft-expressed views on the need to address global warming and control CO2 emissions.

Cheaper gasoline would encourage, or at least not discourage, more driving, more consumption of gasoline, and more CO2 emissions.

Larry Kudlow, the host of CNBC's "Kudlow & Company," raised this point in his interview with McCain Tuesday. The Arizona senator replied that he was "not sure" that suspending the gasoline tax would stimulate gasoline consumption.

McCain carbon emission bill
More than five years ago, McCain, along with Sen. Joe Lieberman, Gore's 2000 running mate, proposed one of the first major bills to limit carbon dioxide emissions.

But Black said, “The climate issue and greenhouse gas emissions is a long-term issue and McCain's got a plan for that and you're going to hear more about it.”

He explained, “I don't think we're telling people don't go on vacation in order to help the environment. That's a longer-term thing that everybody has to participate in."

Black added, "Right now, despite the mortgage crisis and everything else, the biggest problem in people's minds is inflation. It's rising prices of food, gas, and other essentials. So we're trying to give them a break. Will Congress do it? I don't know. I'm skeptical. They have to do it right away.”

Adam Aigner-Treworgy of NBC News and National Journal contributed to this story.