Transcripts

"Commentary"-Gas Price Solutions

SUSIE GHARIB: With gas prices topping $4 a gallon in some markets, Senator Hillary Clinton has become the latest presidential candidate to back lifting the nation's gas tax. Many economists oppose the move. But tonight's commentator says there are a couple of ways the government could bring prices down. He's Len Burman, director of the Tax Policy Center.

LEN BURMAN, DIRECTOR, TAX POLICY CENTER: Senator Clinton has said she doesn't care if a bunch of elitist economists oppose the idea of a summer gas tax holiday; she knows she could make it work. We complained that limited supply would keep gas prices high, even if the Federal tax were suspended. But Mrs. Clinton is right. The government could force prices down, but I don't think she would like the results. One option is price controls -- mandate that pump prices fall by the amount of the tax or even more. We tried that in 1973 and 1979, and it kept prices low. The only problem was shortages -- long lines and service stations shut down because they'd run out of fuel.

If Clinton doesn't want to channel Nixon or Carter, she could try FDR, who imposed rationing to keep prices in check, despite wartime shortages. Unfortunately, people don't like rationing. They tolerated it back in the '40s because they supported the war, but even then, a black market flourished. It's hard to imagine that patriotic fervor for the Iraq war would support gas rationing now. Economics is called the dismal science for a reason. Sometimes, the market creates grim realities, like $4 gas prices and we can't wish or bully pulpit them away. The good news is that market responses to high gas prices, like buying more fuel efficient cars and switching to alternative modes of transport, will bring prices down over time if we let them. I'm Len Burman.