- Biden’s proposal would eliminate a federal tax of 18.4 cents per gallon of gas through September.
- The plan would cost $ 10 billion, but Biden wants to make up for the loss of highway revenue.
- It is unclear whether the White House has enough support for Congress to pass the gas tax exemption.
WASHINGTON – President Joe Biden on Wednesday called on Congress to suspend the federal gas tax for the next three months in one of his administration’s most controversial efforts to give Americans relief as gas prices soar above $ 5 a gallon in many states.
The proposal was met with widespread skepticism. House Speaker Nancy Pelosi, Senate Majority Leader Chuck Schumer, and other top Democrats were undemanding, signaling that he could be sentenced in Congress.
A three-month federal gas tax exemption would suspend a tax of 18.4 cents per gallon of gas and 24.4 cents on diesel that drivers pay when filling their tanks. The White House has announced the vacation as a way to provide some “breathing room” as it works to reduce costs in the long run. The hiatus, which Biden expects to last until September, would require congressional approval.
“We can lower the price of gas and give households just a little relief,” Biden said, urging companies to pass “every penny” of the reduction to consumers. “There is no time for profit now.”
In a White House speech, the president encouraged states and local governments to suspend taxes on gas.
Previously:Biden says he will decide on federal gas tax exemption “by the end of the week”
The federal gas tax revenue provides 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 – about $ 10 billion – with other federal tax revenue. The federal government deficit fell by $ 1.6 trillion this year, Biden said, so the US can afford to suspend the gas tax.
Biden struggled to rein in historic gas prices as skyrocketing inflation put his presidency to the test ahead of November’s mid-term elections. The suspension of the gas tax is one of the quickest steps he can take to try to alleviate the pain for drivers. The national average for a gallon of gas was $ 4,968 Wednesday, according to AAA, a jump of more than $ 1.50 since the Russian invasion of Ukraine in February.
An exemption from the federal gas tax, which has fluctuated over the years but never enacted, has many critics. This week, Larry Summers, Secretary of the Treasury during the Clinton administration and economic adviser to President Barack Obama, called it “a gimmick” that would not solve the underlying problems that cause prices to spike.
Your wallet:Biden weighs a gas tax exemption. How much would consumers save?
A statement from the Committee for a Responsible Federal Budget, a Washington-based nonprofit think tank, warned that the vacation could drive up inflation after it ends and that it would run out of funds for transportation and reduce only a fraction of the overall historical peak in gas prices. Environmentalists have said that a gas tax exemption undermines the goal of switching to clean energy.
There is no guarantee that Biden’s gas tax exemption proposal will pass in Congress, where Democrats would need 60 votes in the evenly divided Senate to overcome any Republican obstruction. Democratic leaders aren’t on board either.
“We will see where consensus lies on a path for the President’s proposal to the House and Senate,” Pelosi said in a statement.
House Majority Leader Steny Hoyer, D-Md., Questioned whether the vacation would provide significant savings for drivers and said he wasn’t sure he had the votes to pass the Democrat-controlled House. “But I also think that trying to lower prices for consumers at the pump is an important goal,” said Hoyer.
Pelosi resisted the idea of a gas tax exemption earlier this year. So did Rep. Peter DeFazio, D-Ore., President of the Transport and Infrastructure Commission of the Chamber. On Tuesday, Senator Tom Carper, D-Del., Called the proposal “shortsighted and inefficient,” saying it would jeopardize the funds used for transportation.
In February, a coalition of battlefield state Senate Democrats – including Raphael Warnock of Georgia, Mark Kelly of Arizona, and Maggie Hassan of New Hampshire – proposed to suspend the gas tax until the end of the year. Their legislation faced resistance from Republicans who criticized it as a political gimmick to help in the medium term. The White House has never mobilized behind the legislation, which has not advanced, but has remained open to it publicly.
Biden’s dilemma:Push fossil fuels to reduce gas prices while promoting a clean energy agenda
All 50 states, as well as the District of Columbia, impose a tax on gasoline, the revenue from which transportation and other infrastructure projects typically pay. The average state gas tax is around 29 cents nationwide; California pays the highest rate and Alaska the lowest.
The White House wants states, as well as cities that have gas taxes, to replicate Connecticut, New York, Maryland, and other states that suspended gas taxes this spring due to rising inflation.
Moreover:Biden will release up to 180 million barrels of oil from the reserve to lower gas prices
A common concern raised by critics of a federal gas tax exemption, including Hairy – is that the oil companies will pocket the tax cut. Research suggests that may not be the case.
The Wharton School of the University of Pennsylvania released budget estimates last week showing that most of the cost savings during the gas tax exemptions that Maryland, Connecticut and Georgia enacted this year went to consumers instead of to service companies or service stations.
In Maryland, the study found that 72% of all tax savings went to consumers. In Georgia, it was 58% to 65% and in Connecticut, 71% to 87%.
Pain at the pump:While gas prices are $ 5 a 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 a gallon since 1993.
During the presidential campaign of 2008, the then sen. Barack Obama opposed the demands of Republican Senator John McCain and Democratic main opponent, Senator Hillary Clinton, to issue a gas tax exemption during 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 the election.”
Biden renewed his call for oil companies to increase refinery capacity and production and for retailers to pass savings on to consumers as the price of oil falls. The president criticized oil company CEOs for raising $ 35 billion in profits during the first quarter of 2022 due to the surge in gas prices. Energy Secretary Jennifer Granholm will meet with oil company executives on Thursday.
“This is a time of war, global danger, Ukraine,” Biden said. “These are not normal times. Reduce the price you are charging at the pump to reflect the cost you are paying for the product. Do it now. Do it today. Your customers, the American people, need relief now.”
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