Biden asks for three-month gas tax holiday
President seeks ‘bit of breathing room’ for Americans.
President Biden WASHINGTON — called on Congress on Wednesday to temporarily suspend the federal gas tax, an effort to give Americans “just a little bit of breathing room” from soaring fuel prices even as economists and lawmakers in both parties expressed skepticism that the move would make much of a difference.
During an afternoon speech, Biden asked Congress to lift the federal taxes — about 18 cents per gallon of gasoline and 24 cents per gallon of diesel — through the end of September, shortly before the fall midterm elections. The president also asked states to suspend their own gas taxes,
hoping to alleviate the eco- nomic pain that has con- tributed to his diminish- ing popularity.
“I fully understand that the gas tax holiday alone is not going to fix the prob- lem,” Biden said. “But it will provide families some immediate relief. Just a little bit of breathing room as we continue working to bring down prices for the long haul.”
The White House faces an uphill battle to get Congress to approve the holiday, however. While the administration and some congressional Democrats have for months discussed such a suspension, Repub- licans widely oppose it and have accused the admin- istration of undermining the energy industry. Even members of Biden’s own party, including Speaker Nanc y Pelosi, have expressed concern that companies would absorb much of the savings, leav- ing little for consumers.
Senator Mitch McConnell of Kentucky, the Republican leader, quickly dismissed the president’s call for suspending the tax. “This administration’s big new idea is a silly proposal that senior members of his own party have already shot down well in advance,” he said.
Biden said he wanted to ensure consumers benefit from the moratorium on the federal tax. The admin- istration estimates that the combination of several possible steps — the suspension of the tax, a halt on state gas taxes and an increase in refining capacity by oil companies — would lower gas prices by at least $1 a gallon.
But critics have ques- tioned the effectiveness of gas tax holidays, dismissing the idea as little more than a desperate attempt by the White House and vulnerable Democrats to show that the party is attentive to Americans’ financial pain.
Economists and some members of Congress have criticized the idea of suspending the federal gas tax as a wasteful step for the government, given the revenue that would be sacrificed in a bid to provide only a mild dose of relief to consumers. Its impact on them would be quite limited: The tax is now such a small slice of the price at the pump, coming in at less than 5% of the total cost, that Americans might not even notice its absence.
“I don’t think it moves the needle on people’s willingness to buy more, and it doesn’t exactly save them a whole lot of money, either,” said Garrett Golding, a business economist at the Federal Reserve Bank of Dallas. “It sounds like something is being done to lower gas prices, but there’s not a whole lot of there there.”
This year, oil and refined fuel prices rose to their highest levels in 14 years because of Russia’s invasion of Ukraine, the sanctions imposed on President Vladimir Putin and a rebound in energy use as the United States recovers from the coronavirus pandemic. The White House has increasingly tried to direct the blame for the rising prices toward Russia, a strategy that has done little to quell anxiety among Americans. The national average for regular gasoline was $4.95 per gallon Wednesday, according to AAA, after reaching $5 this month.
Biden has also released strategic petroleum reserves and suspended a ban on summertime sales of higher-ethanol gasoline blends to try to temper price increases, frustrating climate activists still unhappy over the collapse of the president’s climate and social spending package.
Congress has not increased the federal gas tax since 1993. But it has never lifted the tax either.