Biden proposes 3-month suspension of federal gas tax

Biden’s proposal would eliminate a federal tax of 18.4 cents per gallon of gas by September.
The plan would cost $ 10 billion, but Biden wants to offset the loss of revenue on the highway.
It is unclear whether the White House has enough support in Congress to pass the gas tax holiday.

WASHINGTON – President Joe Biden on Wednesday called on Congress to suspend the federal gas tax for the next three months in one of its administration’s most controversial efforts to provide immediate relief to Americans, as gas prices in many states exceed $ 5 per gallon go up.

The proposal met with skepticism among House Speaker Nancy Pelosi and other top Democrats who remained liberal, indicating that Biden’s proposal could be condemned out of the gates in Congress.

A three-month federal gas tax holiday would raise a tax of 18.4 cents per gallon of gas and 24.4 cents for diesel that drivers pay when they fill their tanks. The White House suggested the holiday as a way to provide some “breathing space” because it works to reduce costs in the long run. The break, which Biden predicts will last until September, would require congressional approval.

“We can bring the price of gas down and give families only a little relief,” Biden said, urging companies to pass on “every penny” of the reduction to consumers. “There is no time for profit now.”

In a White House speech, the president also urged states and local governments to temporarily suspend their gas taxes.

Earlier:Biden says he will decide on federal gas tax holiday “at the end of the week”

Revenue from the federal gas tax goes to the Highway Trust Fund, which is used to pay for transportation and mass transit projects. Biden wants Congress to offset the loss of highway funds – estimated at about $ 10 billion – with other federal tax revenues. With the federal government deficit dropping $ 1.6 trillion this year, Biden said the U.S. can afford to stop the gas tax.

Biden’s pressure comes as he struggles to curb historic gas prices amid skyrocketing inflation that has taken a toll on his presidency ahead of the November midterm elections. Stopping the gas load is one of the quickest steps he can take to try to reduce the pain for drivers. The national average for a gallon of gas on Wednesday was $ 4,968, according to AAA, jumping more than $ 1.50 since the Russian invasion of Ukraine in February.

And yet, a federal gas tax holiday, over the years floated but never instituted, has drawn much criticism. Larry Summers, former Treasury Secretary in the Clinton administration and an economic adviser to President Barack Obama, called it this week “a gimmick” that does not solve the underlying problems that are causing the price hike.

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Some economists warn that it could boost inflation by the end of the holiday, cut off transportation funds and reduce only a fraction of the total historic peak in gas prices. Environmentalists have argued that a gas tax holiday undermines the goal of moving to clean energy.

There is also no guarantee that Biden’s proposal for a gas tax holiday will pass Congress, where Democrats need 60 votes in the equally divided Senate to overcome every filibuster of Republicans. For now, not even democratic leadership is on board.

“We will see where the consensus lies on a path forward for the proposal of the President in the House and Senate,” Pelosi said in a statement.

House Majority Leader Steny Hoyer, D-.Md., Asked if the holiday would provide significant savings for drivers and said he is not sure it has the votes to pass the Democratic-controlled House. “But I also think trying to get consumer prices down at the pump is a major goal,” Hoyer told reporters.

Pelosi opposed the idea of a gas tax holiday earlier this year. So the Rep. Peter DeFazio, D-Ore., Chairman of the House Committee on Transport and Infrastructure. Sen. Tom Carper, D-Del. Tuesday called it “short-sighted and inefficient” to endanger funds used for transportation.

A coalition of Senate Democrats from battlefield states – including Raphael Warnock, D-Ga., Mark Kelly, D-Ariz., And Maggie Hassan, DN.H. – proposed proposed suspension of the gas tax until February until the end of the year. But the legislation resisted opposition from Republicans who struck it as a political stunt to help in the midterms. The White House has never voted in favor of the legislation, which did not move forward but remained open to the public.

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All 50 states, such as the District of Columbia, impose a gasoline tax, with revenue typically paid for transportation and other infrastructure projects. The average state gas tax is about 29 cents nationally, with California paying the highest rate and Alaska the lowest.

The White House wants states, such as cities that have gas tariffs, to replicate Connecticut, New York, Maryland and other states that will temporarily suspend gas taxes this spring amid rising inflation.

More:Bid to release up to 180 million barrels of oil from reserve to reduce gas prices

One common concern raised by critics of a federal gas tax holiday – as well Pelosi – is that oil companies will pocket the tax reduction. But new research suggests that may not be the case.

The University of Pennsylvania’s Wharton School last week published budget estimates showing the majority of cost savings during gas tax holidays introduced by Maryland, Connecticut and Georgia this year went to consumers instead of gas companies or gas stations.

In Maryland, 72% of all tax savings are passed on to consumers, the study found. In Georgia it was between 58% and 65%, and in Connecticut between 71% and 87%.

Pain at the pump:With gas prices at $ 5 per gallon, Biden tells oil companies to cut costs for Americans

The federal gas tax, created in 1932 during the Great Depression, has remained at 18.4 cents per gallon since 1993.

During the 2008 presidential campaign, doe-Sen. Barack Obama opposed calls from Republican senator. John McCain and Democratic primary opponent Sen. Hillary Clinton to introduce a gas tax holiday in the midst of the Great Recession.

“This is not an idea designed to get you through the summer,” Obama said at the time, “it’s an idea designed to get them through an election.”

Biden also renewed its call on oil companies to increase refinery capacity and exports and for retailers to pass on savings to consumers as the price of oil falls. , The president has criticized oil company CEOs for raising $ 35 billion in profits in the first quarter of 2022 as gas prices peak. Energy Secretary Jennifer Granholm is set to meet Thursday with oil company executives.

“This is a time of war, global danger, Ukraine,” Biden said. “These are not normal times. Bring down the price you pick up at the pump to reflect the cost you pay for the product. Do it now. Do it today. Your customers, the American people, have it now relief needed.

In other efforts aimed at reducing gas prices, Biden ordered the release of up to 180 million barrels of oil from the Strategic Petroleum Reserve and lifted restrictions on biofuels such as E15 gasoline.