Thursday, August 07, 2008

Obama's Energy Rebate Gets an F

Over at the WSJ Martin Feldstein takes a look at the effects of Obama's proposed energy rebate. He used the economic effects of the last tax rebates to come up with a likely scenario. The results ?

Cost? 65 billion dollars

Amount of Increased Spending? 10 billion dollars

Why? Because people either bank rebates or use them to pay off debt.

Finally the effect that I'm most concerned about..

His plan, to finance those rebates with an extra tax on oil companies, would reduce investment in refining and exploration, keeping oil prices higher than they would otherwise be.
I'd be lying if I said I couldn't use the money. But if the rebate drives up the price of gas in the long term we'll all be paying it back at the pumps.