Gasoline Tax Holiday and John McCain

John McCain and Hillary Clinton are proposing revocation of gasoline tax for three months -- June, July and August -- for the American consumers. The gasoline tax is about 18 cents per gallon. There are varying estimates of the potential average savings for the consumers -- most estimates (optimistic estimates) appear to put the maximum savings for a family for the entire summer to be about $100.

However, there are several caveats to be stated. First, there may be actually no savings to the families for two reasons -- there may actually be net loss. One reason is that oil companies generally tend to use the repeal of gasoline tax as an excuse to increase the price by an amount that would more than offset gasoline tax. The second reason is that with the repeal of the gasoline tax demand for the gasoline is likely to rise and this demand is not likely to be met by new production essentially leading to a price increase. Second, the repeal of gasoline tax will result in a loss of about $9 billion to the federal highway fund which would result in shortchanging infrastructure development and loss of many jobs -- may be as many as 6,000 in Indiana. Third, this experiment -- revocation of gasoline tax for a short spell -- has been tried (including in Indiana) and the experiment has not only failed to meet the desired goals but also proved counter-productive.

However, all this make political sense for Hillary Clinton -- she is in the fight of her life for the Democratic party presidential nomination, and she wants to get as many votes as possible and differentiate herself from Obama even if it means a bit of theatrical populism.

But the question is this: why is John McCain engaged in this populism? It does not add up. Of course, McCain wants to position himself as a man in touch. However, all this is more likely to muddy up McCain's biggest strength -- an independent, non-populist, somewhat maverick political leader.