WASHINGTON (AP) — President Joe Biden on Wednesday called on Congress to suspend federal gasoline and diesel taxes for three months — an election-year move meant to ease financial pressures that was greeted with doubts by many lawmakers.
The Democratic president also called on states to suspend their own gas taxes or provide similar relief, and he delivered a public critique of the energy industry for prioritizing profits over production. It would take action by lawmakers in Washington and in statehouses across the country to actually bring relief to consumers.
“It doesn’t reduce all the pain but it will be a big help," Biden said, using the bully pulpit when his administration believes it has run out of direct levers to address soaring gas prices. "I’m doing my part. I want Congress, states and industry to do their part as well.”
At issue is the 18.4 cents-a-gallon federal tax on gas and the 24.4 cents-a-gallon federal tax on diesel fuel. If the gas savings were fully passed along to consumers, people would save roughly 3.6% at the pump when prices are averaging about $5 a gallon nationwide.
Biden's push faces uphill odds in Congress, which must act in order to suspend the tax, and where many lawmakers, including some in his own party, have expressed reservations. Even many economists view the idea of a gas tax holiday with skepticism.
Democratic House Speaker Nancy Pelosi offered a noncommittal response to Biden's proposal, saying she would look to see if there was support for it in Congress.
“We will see where the consensus lies on a path forward for the president’s proposal in the House and the Senate," Pelosi said.
Unlikely to pass a gas tax holiday through the 50-50 Senate, Majority Leader Chuck Schumer of New York said Wednesday that Democrats will focus instead on their bill to crack down on oil companies “manipulating the market” for higher prices and profits. “We’re going to focus on that issue,” Schumer said.
The president said “states are now in a strong position to be able to afford to take some of these actions," thanks to federal support from the 2021 COVID-19 relief bill. But there is no guarantee that states will tap into their budgets to suspend their taxes on gas or to deliver rebates to consumers, as Biden is requesting.
Barack Obama, during the 2008 presidential campaign, called the idea of a gas tax holiday a “gimmick” that allowed politicians to “say that they did something.” He also warned that oil companies could offset the tax relief by increasing their prices.
The administration is saying that gas tax suspensions at the federal and state levels as well as energy companies pouring their profits into production and refining capacity could cut gas prices by $1 a gallon.
High gas prices pose a fundamental threat to Biden's electoral and policy ambitions. They've caused confidence in the economy to slump to lows that bode poorly for defending Democratic control of the House and the Senate in November.
Biden's past efforts to cut gas prices — including the release of oil from the U.S. strategic reserve and greater ethanol blending this summer — have not delivered savings at the pump, a risk that carries over to the idea of a gas tax holiday.
Senate Republican leader Mitch McConnell mocked the gas tax holiday as an “ineffective stunt” in a Wednesday floor speech. “This ineffective administration's big new idea is a silly proposal that senior members of their own party have already shot down well in advance,” he said.
Rep. Peter DeFazio, the Democratic chairman of the House Transportation and Infrastructure Committee, said he would not support suspending the gas tax. “I’m going to be working against it. I have the largest committee in Congress, so we’ll see.”
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