Biden wants a gas tax exemption. Here’s why Congress isn’t on board

Almost everyone agrees on that. How to fix it is a whole different story.

“By suspending the 18-cent gas tax, the federal gas tax, for the next 90 days, we can bring the price of gas down and give families some relief,” Biden said in a statement. White House speech.

But such a step is a long shot in Congress. Here’s what you need to know about the president’s proposal and why it’s likely to stay that way.

What is a gas tax holiday?

A gas tax exemption is exactly what it sounds like. Typical taxes that apply to gasoline and diesel purchases are waived for a period of time, providing some relief to consumers.

These tax exemptions can come from the federal government, state governments, or both.

Federal gas tax revenue helps fund the already strapped Highway Trust Fund. The federal gasoline tax has not increased since 1993, when gasoline sold for just over $1 a gallon.

What does Biden’s federal proposal imply?

The federal gasoline tax is approximately 18 cents per gallon, while the federal diesel tax is 24 cents per gallon. Biden’s proposal would waive those taxes until the end of September.

“I fully understand that a gas tax waiver alone will not solve the problem, but it will provide families with immediate relief, just a bit of respite as we continue to work to bring prices down to long term,” the president said. said Wednesday.

How much could it help?

Combined with other steps (we’ll get to that in a minute), senior administration officials say Biden’s proposal could lower the price of a gallon of gasoline by $1.

Yet that figure hinges on a number of steps entirely beyond the president’s control, and some economists are skeptical that the potential savings would even reach consumers.

Mark Zandi, chief economist at Moody’s Analytics, has an even more cynical view, telling Matt Egan of The News that a gas tax exemption could even be inflationary, forcing the Federal Reserve to raise interest rates. interest more aggressively.

“I’m not a fan. You want people to drive less and use less gas. It defeats that purpose,” he said. “It’s not well targeted. »

Have any states enacted tax exemptions on gasoline?

In recent months, Maryland, Georgia, Connecticut and New York have all suspended their gasoline taxes for varying lengths of time.

The non-partisan Penn Wharton Budget Model examined tax exemptions in Georgia, Maryland, and Connecticut and found “causal evidence” that the benefits “were primarily passed on to consumers at some point during the tax exemption in the form of prices lower gasoline.

However, consumers do not fully benefit from state gasoline tax exemptions. The report found that they must share the savings with gas suppliers, who capture part of the profits if prices at the pump do not fall by the full amount of the suspended tax.

Why did Biden’s proposal die when it arrived in Congress?

Even if the president can get the 50 Democratic senators behind the legislation, he would need 10 Republicans to join the cause to push the measure forward, which seems extremely unlikely.

Why do Republicans oppose it?

Republicans cite various concerns about lifting the gas tax. An analysis of tweets from GOP senators after Biden’s speech on Wednesday afternoon shows some of the sentiment he faces:

Senator Roger Wicker of Mississippi: “First, President Biden blamed Vladimir Putin for skyrocketing gas prices. Then he blamed the energy producers. Now he’s trying to dodge blame for our energy crisis by resorting to a cheap gimmick. »
Senator Marsha Blackburn of Tennessee: “President Biden said he was going to shut down American energy, and he is keeping that promise. It’s time for him to stop his stuff and start drilling in the country. »
Senator Kevin Cramer of North Dakota: “When gas is $5 a gallon, the American people aren’t asking for 18 cents in aid, they want Trump’s energy policies back!” Suspending the gas tax is nothing more than a knee-jerk political punch that offers minimal assistance while gouging a hole in our infrastructure funding. »

Why do the Democrats oppose it?

Democrats, including House Speaker Nancy Pelosi, agreed with the idea that Barack Obama called a “trick” while still a presidential candidate in 2008.

Just read this dispatch from the Capitol Hill team of The News: In a sign of a rise for Biden, moderate Democratic Senator Joe Manchin of West Virginia, who chairs the Senate Energy and Natural Resources Committee, told Manu Raju of The News on Tuesday evening that he was “ a bit skeptical” about the gas tax exemption Biden is considering embracing, saying “there is no guarantee” he will lower gas prices.

And Senator Tom Carper, a Democrat from Biden’s home state of Delaware, said in a tweet he was “happy” that Biden was exploring ideas for gas prices, but added that it was “a short-sighted and ineffective way to provide relief.”

With Manchin and Carper seemingly opposed, Democrats would also fail if they tried to push such a measure themselves through a procedure called reconciliation, which would only require 50 votes to move forward.

Even Democrats expressing support for Biden’s proposal don’t seem particularly enthusiastic. Take Democratic Senator Whip Dick Durbin of Illinois.

He told Les actualites on Wednesday that he supports the proposal, but cautioned that the administration and Congress needed to be “honest” about the effects it would actually have on actually reducing the cost of gas. Durbin also warned that it could affect infrastructure funding, which the federal gas tax supports.

How is the Biden administration approaching the negotiations?

Energy Secretary Jennifer Granholm told The News on Wednesday that the Biden administration is “in constant contact with Congress” as it brushes aside concerns expressed by Democrats and Republicans.

“Well, I mean…it’s a conversation, right? So that conversation is ongoing,” Granholm said at the White House press conference. “And I know those Democrats are also concerned about the price their constituents are paying at the pump, and Republicans are as well – I mean, that’s the problem, so hopefully, in the past, Republicans have introduced a gas tax exemption, and there is no more acute moment than right now. »

Biden, she added, “will have these conversations with Democrats and Republicans” going forward. “I hope both sides of the aisle listen to their constituents for relief – I think the citizens will be the loudest voice in the room. »

What other steps is Biden taking?

Beyond his proposal for a federal government gasoline tax holiday, the president called on states to take action to remove their own gasoline and diesel taxes. He also urged oil refining companies to increase capacity ahead of their scheduled meeting this week with administration officials.

“My message is simple,” Biden said. “To the companies that run gas stations and set these prices at the pumps: this is a time of war, a global peril, Ukraine – these are not normal times. Reduce the price you charge at the pump to reflect the cost you’re paying for the product. Do it now. Do it today. Your customers, the American people, they need relief now.

What’s at stake for Biden?

A lot. Gasoline prices and inflation in general are among the top political liabilities for Democrats heading into November’s midterm elections.

Biden and his administration have repeatedly blamed Russian President Vladimir Putin and his war on Ukraine for rising gas and energy prices, though experts also cite other factors — including strong demand, clogged supply chains, rising housing costs and Covid-19 stimulus efforts – as reasons for the price spike.

A Les Actualites poll released last month found that the economy remains a particularly weak spot for the president.

Only 23% believe economic conditions are even quite good, compared to 37% in December and 54% in April 2021. The last time public perception of the economy was this bad in the Les actualites poll was in November 2011, when 18% rated economic conditions as good.

Americans also said by nearly 4 to 1 that they were more likely to hear bad news than good news about the economy.

If that doesn’t change, Democrats’ aspirations for November could soon run out of steam.

Kevin Liptak, Daniella Diaz, Sarah Fortinsky and Lauren Fox of Les actualites contributed to this report.

Leave a Comment

Your email address will not be published.

Scroll to Top