President Joe Biden on Wednesday called on Congress to suspend federal gasoline and diesel taxes for three months — an election-year move meant to ease financial pressures that was greeted with doubts and ridicule by experts, lawmakers, and economists.
“It doesn’t reduce all the pain but it will be a big help,” Biden said, attempting to use the bully pulpit when his administration believes it has little remaining control over soaring gas prices. “I’m doing my part. I want Congress, states, and industry to do their part as well.”
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At issue is the 18.4 cents-a-gallon federal tax on gas and the 24.4 cents-a-gallon federal tax on diesel fuel. If the gas savings were fully passed along to consumers, people would save… but not much.
One critic did the math on social media —
90-day federal gas tax holiday will provide working families breathing room.
18 cents per gallon
260 miles per week
26 mpg to make math easy
The average driver should save about $2/week through this major policy to lower gas prices.
— Ryan Maue (@RyanMaue) June 22, 2022
IF Biden were to implement a gas tax holiday (cutting the federal gas tax to zero), here's what motorists might save per week with average consumption…
Pickup truck: $5.52
— Patrick De Haan ⛽️📊 (@GasBuddyGuy) June 20, 2022
Biden’s push faces uphill odds in Congress, which must act to suspend the tax, and where many lawmakers, including some in the Democratic Party, have expressed reservations.
Most economists view the idea of a gas tax holiday with skepticism.
Democratic House Speaker Nancy Pelosi offered a noncommittal response to Biden’s proposal, saying she would look to see if there was support for it in Congress.
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“We will see where the consensus lies on a path forward for the president’s proposal in the House and the Senate,” Pelosi said.
Unlikely to pass a gas tax holiday through the 50-50 Senate, Majority Leader Chuck Schumer of New York said Wednesday that Democrats will focus instead on their bill to crack down on oil companies “manipulating the market” for higher prices and profits.
Barack Obama, during the 2008 presidential campaign, called the idea of a gas tax holiday a “gimmick” that allowed politicians to “say that they did something.” He also warned that oil companies could offset the tax relief by increasing their prices.
High gas prices pose a fundamental threat to Biden’s electoral and policy ambitions. They’ve caused confidence in the economy to slump to lows that bode poorly for defending Democratic control of the House and the Senate in November.
Biden’s past efforts to cut gas prices that were criticized by economists — including the release of oil from the U.S. strategic reserve and greater ethanol blending this summer — have failed to delivered savings at the pump, a risk that carries over to the idea of a gas tax holiday.
The president can do remarkably little to fix prices that are set by global markets, profit-driven companies, consumer demand, and aftershocks from Russia’s invasion of Ukraine and the embargoes that followed. The underlying problem is a shortage of oil and refineries that produce gas, a challenge a tax holiday cannot necessarily fix.
Mark Zandi, chief economist at Moody’s Analytics, estimated that the majority of the 8.6% inflation seen over the past 12 months in the U.S. comes from higher commodity prices due to Russia’s invasion, continued disruptions from the coronavirus, and increased consumer spending tied to huge coronavirus relief packages.
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“In the immediate near term, it is critical to stem the increase in oil prices,” Zandi said last week, suggesting that Saudi Arabia, the United Arab Emirates, and a nuclear deal with Iran could help to boost supplies and lower prices. Republican lawmakers have tried to shift more blame to Biden, saying he created a hostile environment for domestic oil producers, causing their output to stay below pre-pandemic levels.
Senate Republican leader Mitch McConnell mocked the gas tax holiday as an “ineffective stunt” in a Wednesday floor speech. “This ineffective administration’s big new idea is a silly proposal that senior members of their own party have already shot down well in advance,” he said.
Rep. Peter DeFazio, the Democratic chairman of the House Transportation and Infrastructure Committee, said he would not support suspending the gas tax. “I’m going to be working against it. I have the largest committee in Congress, so we’ll see.”
DeFazio said a better course would be to tax oil companies on “windfall profits.”
Administration officials claimed the $10 billion cost of the gas tax holiday would be paid for and the Highway Trust Fund kept whole, even though the gas taxes make up a substantial source of revenue for the fund. The officials did not specify any new revenue sources.
The president has also called on energy companies to accept lower profit margins to increase oil production and refining capacity for gasoline.
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This has increased tensions with oil producers: Biden has judged the companies to be making “more money than God.” That kicked off a chain of events in which the head of Chevron, Michael Wirth, sent a letter to the White House saying that the administration “has largely sought to criticize, and at times vilify, our industry.”
Asked about the letter, Biden said of Wirth: “He’s mildly sensitive. I didn’t know they’d get their feelings hurt that quickly.”
Energy companies are scheduled to meet Thursday with Energy Secretary Jennifer Granholm to discuss ways to increase supply.
The Associated Press contributed to this article