What On Earth Happened to Obama`s Economic Advisors?

Obama's solution [h/t Cafe Hayek]for dealing with high gasoline prices sounds just as dumb as, maybe dumber than, the one proposed by Hilary Clinton. Recall that she wanted to lower the federal gasoline tax, and Obama rightly criticized her plan pointing out that lowering the federal gas tax would increase the demand such that the pump price would not change much, if at all, and that in the end oil company profits would rise.

Well, we can't have oil company profits rise, now, can we! So Obama's solution is to give people $1000, regardless of whether they drive or even own a car, and to fund this lump-sum transfer by taxing the "excess" or "windfall" profits of the oil companies [What did I tell you!]

Does he have no advisors who are willing to point out how dumb this is? A tax on oil company profits might not reduce the supply of gasoline much in the short run, but it will surely lead to a reduction in supply in the longer run as financial capital flees to other, more lucrative investments.

And the Obama plan would surely increase the demand for gasoline, which would lead to higher, not lower, gasoline prices. And as gasoline prices began rise, the likely next step for elitist interventionists like Obama and his supporters would be price ceilings, followed by shortages with all the attendant problems we faced in 1979. Can rationing and political control of who gets the gasoline be far behind?

It is disconcerting that this form of demogoguery might work. We'd all like an extra thousand dollars, and we're happy to have it come from the coffers of the oil companies. So we might vote for this type of plan if we don't think about the implications. I'm willing to believe that over half the people who have had introductory economics would vote for this plan, and if that's so, we as economists are not doing a very good job.