How dumb is the American public?

Greg Mankiw and Paul Krugman - two economists, who often disagree - agree that Hillary Clinton and John McCain are full of it.

Clinton and McCain have proposed that to benefit the US consumer the federal gas tax (18 cents a gallon) be lifted for the summer. Mankiw and Krugman agree that in fact the benefits would flow almost exclusively to the producers, not the consumers. For those of you who've had Economics 101 you'll understand that's because the short term demand and supply for gasoline are both highly inelastic.

Of course Clinton would then argue we need a windfall profits tax on producers. And at the same time blame the oil companies for not taking a long term view on investment. Is she hypocritical, stupid or ignorant? -- it doesn't much matter to me.

Clinton and McCain are also in agreement that to address the problem of global warming there should be a cap-and-trade system for carbon emissions. Economists have estimated that a consequence would be an increase in the retail price of gasoline by 35 cents a gallon.

Obama argues against the gas tax holiday saying it's pandering for votes, and a gimmick because it only saves the average American family $30. But even he's wrong: he's assuming the price will come down 18 cents. Again, the price would come down very very little.

Or you can listen to Leonard Burman explain it in an interview at the NewsHourPBS. Once he gets rolling it's good.

Finally, here's another good explanation which focuses on the point that Clinton's policy adds up to chasing your own tail. You end up where you started.

UPDATE - The Washington Post also takes a look at the economics. The story reminds Greg Mankiw of this exchange between Adlai Stevenson had with a voter:

During his 1956 presidential campaign, a woman called out to him, "You have the vote of every thinking person!" Stevenson called back, "That's not enough, madam, we need a majority!" (source)