Lower gas prices continue to dominate the headlines as more American consumers are saving money and putting more dough in their pockets. Due to market innovation and private investment in oil production, the United States has significantly enhanced its domestic oil production levels unseen in quite sometime, which means less dependence on foreign oil.
Although this substantial decrease in oil prices is because of the market, the federal government is attempting to claim some of the adulation, though the current administration has stifled oil production on public lands, which means the president and his cohorts can’t take credit.
For instance, Treasury Secretary Jack Lew told an audience in New York on Thursday that lower gas prices are effectively huge tax cuts for the entire U.S. economy, which will also provide a significant boost to the struggling economic recovery.
“Short-term we’re seeing a U.S. economy that’s growing with increasing strength, and lower energy prices are going to be a boost to consumer demand and confidence,” Lew said. “So in terms of the macro economic impact, it’s a net positive. There’s always a question about what will be the impact on our production. I think it’s a great success story that we’re now producing oil in the quantity that we are.”
A tax cut is when the government purposely reduces its take of your earnings. Instead of stealing 25 percent of your income, elected officials will pass legislation to actually cut that tax rate by 10 percent. In this case of falling oil prices, the government has done no such thing, and instead politicians are mulling over raising the gas tax.
Here is what former Pennsylvania Governor Ed Rendell said in an interview with CNBC last week:
“The gas tax hike … would be 12 cents adjusted for inflation. That would cost the average driver $130 a year, they would get a return on that investment. They would actually save money. It would make our roads safer, improve our quality of life, it would make us more economically competitive. It would create tens of thousands of middle-class jobs…”
Of course, this is a different story for another day.
Essentially, the government has not given the American people a tax cut. If Lew wants to use that same logic then one could posit that the market was the one to give the U.S. a tax cut, not Congress nor the president.
Whatever. As long as the government gets less of your money then all the better.
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