After Months of Americans feeling the pain at the pump, the Biden administration is finally trying something to ease the financial burden. The problem is, that many experts claim suspending the gas tax will make the inflation crisis worse. This could spell even more trouble for Americans’ wallets in the fall.
Sarah Ferris and Adam Cancryn; June 21, 2022
President Joe Biden on Wednesday called for suspending the federal gasoline tax, in his latest bid to curb rising fuel prices, though it stands almost no chance of passage in Congress.
Biden asked lawmakers to pass a three-month pause on the federal 18-cent-per-gallon levy, casting the proposal as a temporary measure that would provide relief to Americans without harming the road-building projects the tax traditionally funds.
The president also urged individual states to suspend their own gas taxes during that period, or seek ways to offer similar discounts from high prices at the pump. It’s a reflection of the intensifying political pressure on a White House combating near-record levels of inflation.
“A federal gas tax suspension alone won’t fix the problem we face,” a senior administration official told reporters Tuesday night. “But it will provide families a little breathing room.”
Biden’s gas tax holiday, however, has already been met with skepticism from senior Democrats in the House. Speaker Nancy Pelosi and others have questioned whether the policy will lead to savings at the pump, rather than excess profits for gas companies. Democrats chose not to include it in their own bill aimed at lowering gas prices last month.
“I’ve not been a proponent of the gas tax,” House Majority Leader Steny Hoyer said in a brief interview on Tuesday night. “I just don’t know that it gives much relief.”
White House officials began telegraphing their intentions over the weekend: Multiple Democrats received phone calls from aides in the legislative affairs office, informing them Biden was strongly considering the idea.
On Tuesday, Biden offered a preemptive defense of the proposal, arguing that while it would have some financial effect on the highway trust fund, “it’s not going to have an impact on major road construction and major repairs.”
The White House estimates that a three-month suspension of the tax would cost the trust fund $10 billion, which officials said could be offset through other unspecified revenues.
Biden’s pleas for Congress and states to take action on a gas holiday come as millions of Americans prepare for summertime driving, including over next month’s July Fourth weekend. But in reality, any federal gas holiday does not have broad Democratic support, let alone the multiple Republicans needed to pass the policy in the Senate.
The more likely scenario, multiple Democrats acknowledged on Tuesday evening, was for Biden to put pressure on states to enact their own gas tax holidays, as states like Maryland have already done, though with limited political gains. Privately, some Democratic lawmakers dismissed the move as “too little, too late,” with gas prices expected to rise even more sharply through the summer and no long-term strategy to combat it.
Still, Democrats in some of the nation’s toughest races — who have been eager to see Biden take action on rising prices — embraced the idea.
“I’m for it,” said Rep. Dan Kildee (D-Mich.), who is running in a critical battleground in Michigan. “I was for it a long time ago.”
Already, Biden has released record amounts of oil from the nation’s emergency reserve and allowed more ethanol into the fuel supply — moves aimed at easing supply strains driven largely by Russia’s prolonged invasion of Ukraine.
But the moves provided only temporary relief, leaving the White House with few remaining options and no guarantees that it can drive prices down by November.
Even as they previewed Biden’s planned call for a gas tax suspension on Tuesday night, senior administration officials sought to downplay the significance of the move, calling it just one of a series of actions required to rein in prices.
Biden on Wednesday is also expected to further pressure the oil and gas industry to find ways to boost supply, and encourage retailers to find savings they can pass on to consumers.
“We see it as part of a suite of policies that are designed to provide that relief, including policies that address the supply side,” a senior administration official said.
On a Tuesday call with reporters, a senior administration official said they were “encouraged” that there were already legislative proposals suspending the gas tax — but stopped short of expressing confidence that Congress would ultimately act.
Photo: Gene J. Puskar/AP Photo