Biden calls for 3-month suspension of gasoline and diesel taxes | Policy
WASHINGTON (AP) — President Joe Biden on Wednesday called on Congress to suspend federal gasoline and diesel taxes for three months — a election year move intended to ease financial pressures that was met with suspicion by many lawmakers.
The Democratic president also called on states to suspend their own gasoline taxes or provide similar relief and publicly criticized the energy industry for prioritizing profits over production. Still, his announcement hinges on the actions of lawmakers in Washington and in state houses across the country to provide real relief to consumers.
“It won’t reduce all the pain, but it will be a huge help,” Biden said, using the bullying pulpit when his administration feels it has run out of direct levers to pull to deal with the crisis. skyrocketing gasoline prices. “I’m doing my part. I want Congress, states and industry to do their part as well.
In question, the federal tax of 18.4 cents per gallon on gasoline and the federal tax of 24.4 cents per gallon on diesel fuel. If gasoline savings were fully passed on to consumers, people would save about 3.6% at the pump when prices average about $5 per gallon at national scale.
Biden’s push faces challenges in Congress, which must act to suspend the tax, and where many lawmakers, including some from his own party, have expressed reservations. Even many economists consider the idea of gasoline tax exemption with scepticism.
The president said “states are now in a strong position to be able to afford to take some of these steps,” thanks to federal support for the COVID-19 Relief Bill of 2021, but there is no more assurance that states will dip into their budgets to suspend their gas taxes or offer consumer rebates, as Biden demands.
Barack Obama, during the 2008 presidential campaign, called the idea a “trick” that allowed politicians to “say they did something”. He also warned that oil companies could offset the tax relief by raising their prices.
Biden’s energy adviser Amos Hochstein pushed back Wednesday, saying consumers could save about 50 cents per gallon if Congress and states heed the president’s plea and the oil industry doesn’t pocket the savings.
“It’s not a gimmick,” Hochstein, senior adviser for global energy security at the State Department, told CNN. “It’s a bit of respite for the American people as we enter the summer driving season.”
High gas prices pose a fundamental threat to Biden’s electoral and political ambitions. They caused confidence in the economy from collapsing to low levels that bode ill for defending Democratic control of the House and Senate in November.
Biden has acknowledged how gas prices have weighed on public enthusiasm as he tries to convince people that the United States can still pivot to a clean energy future. In an interview with the Associated Press last week, Biden described a country already healing psychological scars from the coronavirus pandemic who now worries about how to afford gasoline, food and other necessities.
“If you notice, until gas prices started to go up,” Biden said, “things were a lot more, they were a lot more optimistic.”
The president can do remarkably little to fix the prices that are set by global markets, for-profit corporations, consumer demand and the aftershocks of The Russian invasion of Ukraine and subsequent embargoes. The underlying problem is a shortage of oil and refineries that produce gas, a challenge that a tax holiday may not necessarily solve.
Mark Zandi, chief economist at Moody’s Analytics, estimated that the majority of 8.6% inflation observed over the past 12 months in the United States stems from the rise in commodity prices due to the invasion of Russia and the continued disruptions due to the coronavirus.
“In the immediate term, stemming the rise in oil prices is essential,” Zandi said last week, suggesting that Saudi Arabia, the United Arab Emirates and a nuclear deal with Iran could help boost supply and lower prices. Republican lawmakers have tried to shift the blame further to Biden, saying he created a hostile environment for domestic oil producers, causing their output to remain below pre-pandemic levels.
Senate Republican Leader Mitch McConnell derided the gas tax exemption as an “ineffective stunt” in a speech on Wednesday. “The big new idea from this ineffective administration is a stupid proposition that senior officials in their own party have already rejected well in advance,” he said.
House Speaker Nancy Pelosi and other congressional Democrats have long feared that suspending the gas tax would simply allow oil companies to reap additional profits with no guarantee that the savings would be passed on to consumers. at the pump.
Rep. Peter DeFazio, Democratic chairman of the House Transportation and Infrastructure Committee, said he would not support suspending the gas tax. “I will work against that. I have the biggest committee in Congress, so we’ll see.
DeFazio said a better solution would be to tax oil companies on “windfall profits.”
House Majority Leader Steny Hoyer, D-Md., said he would consider the proposal because Biden proposed it.
“What I’m not sure is that it will actually have the intended effect in terms of retail price, if we’re actually going to save the consumer money,” Hoyer said. “Do I think we have the votes? We haven’t been counted, so we don’t know yet.
But Dan Kildee, D-Mich., said he’s been a longtime supporter of a federal gasoline tax exemption.
“I admit some frustration because I think it would have been more effective if we had done this a few months ago,” Kildee said. “But it’s never too late to do the right thing.”
A Democratic aide, who insisted on anonymity to candidly discuss the situation on Wednesday, said it seems unlikely the proposal could pass the House without first clearing the equally divided Senate.
Administration officials said the $10 billion cost of the gas tax exemption would be paid and the Highway Trust Fund would remain in full, even though gas taxes are a substantial source. income for the fund. Officials did not specify new sources of income.
The president also called on energy companies to accept lower profit margins increase oil production and gasoline refining capacity.
This has increased tensions with oil producers: Biden has judged that the companies make “more money than God”. This triggered a series of events in which chevron headMichael Wirth, sent a letter to the White House saying the administration “has widely sought to criticize, and sometimes vilify, our industry.”
Asked about the letter, Biden said of Wirth: “He is slightly sensitive. I didn’t know they would be hurt so quickly.
Energy companies are due to meet the Energy Secretary on Thursday Jennifer Granholm to discuss ways to increase supply.
Associated Press writers Lisa Mascaro, Matthew Daly and Kevin Freking contributed to this report.
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