Biden to urge Congress to suspend federal gas tax for 3 months

FILES - Cars line up at a Shell gas station June 17, 2022, in Miami. President Joe Biden on June 22 will call on Congress to suspend the federal gasoline and diesel taxes for three months. It's a move meant to ease financial pressures at the pump that also reveals the political toxicity of high gas prices in an election year. (AP Photo/Marta Lavandier, File)

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President Joe Biden will ask the U.S. Congress on Wednesday to suspend for three months a federal tax on soaring gasoline prices that is angering Americans just months before the midterm elections. (Agence France-Presse (AFP)

Biden to urge Congress to suspend federal gas tax for 3 months

By Cleve R. Wootson Jr.,
Tony Romm
washingtonpost.com

WASHINGTON - President Biden will urge Congress on Wednesday to suspend the federal gas tax of 18.3 cents per gallon for three months, marking the latest White House effort to contend with high inflation and reassure voters the administration is sensitive to the impact of rising prices on their wallets.

The announcement, previewed by the White House, will come just days before millions of Americans fill up their tanks in advance of July 4 weekend travel, although drivers are unlikely to see reductions the president hopes for by then. Biden will also ask Congress to suspend the 24.3-cent-per-gallon diesel tax.

To further lower prices, Biden will call on states to suspend their own gas taxes. And he plans to urge oil companies and refineries to lower prices for consumers, even if doing so means eating into their own profits.

If all those things happen, the administration estimates consumers could save about a dollar per gallon. The average cost of a gallon of gas hit nearly $4.97 per gallon nationally on Tuesday, down from its record high above $5 per gallon earlier this month, according to AAA.

But Biden’s wish is by no means a guarantee. The president’s request is likely to face tough opposition on Capitol Hill, including from senior members of his own party who have already made it clear they object to a gas tax suspension.

For months, some Democrats and Republicans have questioned the wisdom and effectiveness of suspending the federal gas tax, saying it may provide scant help to Americans in need. Republicans in particular have called a potential gas tax suspension a political stunt by a president who has seen his popularity plummet as the cost of an array of goods has gone up.

And Republicans may also be hesitant to give Biden a win on an economic issue of deep concern to voters five months before midterm congressional elections.

“This is nothing but a midterm election gimmick,” Sen. Bill Hagerty (R-Tenn.) said on Fox News before the announcement. “They’re trying to buy votes right now with this. … And you know, a short-term gimmick like this is just nothing but that. Very shortsighted. It will not fix the inherent problem.”

Some Democrats, too, expressed concerns about whether a tax suspension would trickle down to consumers.

“I do not like the idea of a federal gas holiday that’s being talked about,” said Rep. Pramila Jayapal (D-Wash.), the leader of the left-leaning Congressional Progressive Caucus, in an interview on Tuesday before the White House announcement. “I don’t think that’s going to make it down to the consumer.”

I’m glad that @POTUS is exploring ways to lower gas prices at the pump. Still, suspending the primary way that we pay for infrastructure projects on our roads is a shortsighted and inefficient way to provide relief. We should explore other options for lowering energy costs.
— Senator Tom Carper (@SenatorCarper) June 21, 2022

House Speaker Nancy Pelosi (D-Calif.) expressed similar skepticism earlier this spring, even as some of her fellow Democrats — led by the most vulnerable entering the 2022 midterms — began to unveil legislation calling for a fuel tax holiday. Instead, she and other party leaders have focused on trying to advance legislation that would punish oil and gas companies for price gouging, arguing that the industry has manipulated prices to rake in record profits.

But that bill, which cleared the House last month, has faltered amid Republican opposition in the Senate.

Other congressional Democrats have sounded new support for higher taxes on the industry’s windfall profits, which could then be passed back to consumers in the form of gas rebates. But the Biden administration this week declined to endorse the idea, which is unlikely to garner GOP support in any case.

Both parties’ members have also questioned the policy implications of suspending the gas tax only months after Congress passed a roughly $1.2 trillion law to improve the nation’s infrastructure. Many federal road and highway programs are funded through a trust fund that’s sourced from fuel tax revenue.

“Suspending the federal gas tax will not provide meaningful relief at the pump for American families, but it will blow a multibillion-dollar hole in the highway trust fund, putting funding for future infrastructure projects at risk,” Rep. Peter A. DeFazio (D-Ore.), the top lawmaker on the House’s leading transportation committee, said in a statement before the White House announced its request.

A senior administration official said Biden will ask any gas tax suspension to also safeguard the highway trust fund.

Questions also loom about other aspects of Biden’s plan. While some states, like New York, have already passed a gas tax holiday, most state legislatures have adjourned for the summer.

But the White House has been casting about with increasing urgency for actions it can take on inflation. Polls suggest voters are deeply worried about rising prices. Most economists believe there is little a president can do to affect the costs of everyday items in the short term, but that is unlikely to protect Biden’s fellow Democrats in November if inflation does not show signs of slowing by then.

While a federal gas tax holiday might be popular with drivers and could give Biden a small political boost, economists generally agree it is more likely to worsen the energy shortage than help alleviate it. Artificially bringing prices down sends a signal to consumers to drive more, which could be a problem at a time when there is still a serious fuel shortage.

Demand needs to drop for prices to come down in any durable way, economists say, since oil companies generally are already producing everything they can, and shortages are driven by Russian sanctions that could extend well into the future.

It is also unclear if gas companies, which have been the subject of Biden’s criticism over the past few months, will eat into their own profits simply because the president says they need to give consumers relief at the pump. Energy Secretary Jennifer Granholm is scheduled to meet with oil company executives on Thursday in a search for solutions for gas price increases, though Biden will not personally meet with the executives.

But the president is under pressure to show that he is at least trying to do what he can to bring down prices and that he empathizes with Americans whose commutes and other trips are suddenly far more expensive.

Although the president has stressed that rising prices are a direct result of Russia’s invasion of Ukraine — a two-page document about his call for a tax suspension mentions “Putin” four times — the president has also blasted oil companies and others who he says have capitalized on misery at the pump.

At an event in California this month, he criticized the companies for making “more money than God” while Americans struggle with rising prices in the wake of a pandemic and the economic reverberations of Russia’s invasion of Ukraine. He reiterated that message on Tuesday.

In response, Michael Wirth, chairman and CEO of Chevron, sent Biden a letter saying the president’s scathing words were not helping to find constructive solutions.

When asked about the letter on Tuesday, Biden replied: “He’s mildly sensitive. I didn’t know they’d get their feelings hurt that quickly.”

Staff writer Evan Halper contributed to this report.