On Wednesday, President Biden called on Congress to suspend federal gasoline and diesel taxes for three months — an election-year move intended to ease fiscal 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 he publicly criticized the energy industry for prioritizing profits over production. Steps should be taken by lawmakers in Washington and 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 bully pulpit when his administration feels it no longer has direct levers to deal with the surge in violence. gasoline prices. “I am 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 gas savings were fully passed on to consumers, people would save about 3.6% at the pump when prices average about $5 a gallon nationally.
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.
American Trucking Associations President Chris Spear called on Washington leaders to seriously consider lowering energy prices and curbing inflation, rather than considering a proposal to temporarily suspend the federal tax on fuels.
“Here are three immediate things this administration and Congress can do that will actually make a difference,” Spear said in a statement. “Make America energy independent…stop kissing the Saudi ring. Renew trade agreements with the European Union and Asia-Pacific countries to export more oil and natural gas And, balance the budget…stop wasting taxpayers’ hard-earned money on senseless programs that drive up inflation and runaway deficits.
“Energy independence, trade and balanced budgets. Do that, and America wins.
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 view the idea of a gas tax exemption with skepticism.
Democratic House Speaker Nancy Pelosi offered a noncommittal response to Biden’s proposal, saying she would look to see if it received support in Congress.
“We’ll see where the consensus is on the way forward for the president’s proposal in the House and Senate,” Pelosi said.
In his speech, Biden linked rising energy prices to Russia’s invasion of Ukraine and said, “Defending freedom, defending democracy was not going to come without a cost to the American people and the rest of the free world.
The president noted that lawmakers supported sanctions against Russia and helped Ukraine despite inflation risks stemming from energy and food shortages.
Democrats, Republicans and independents in Congress have chosen to support Ukraine “with full knowledge of the cost”, he said.
“So to all those Republicans in Congress who are criticizing me today for high gas prices in America: are you saying you were wrong to support Ukraine?” Biden said. “Are you saying we’d rather have lower gas prices in America than [Russian President Vladimir] Putin’s iron fist in Europe? I do not believe that. ”
The president said “states are now in a strong position to be able to afford to take some of these measures,” thanks to federal support for the COVID-19 Relief Bill 2021. But there is no guarantee that states will draw on their budgets to suspend their gas taxes or to provide consumer rebates, as Biden demands.
Barack Obama, during the 2008 presidential campaign, called the idea of a gas tax exemption 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.
The administration says federal and state gasoline tax suspensions and energy companies pouring their profits into production and refining capacity could cut gasoline prices by $1 a gallon.
High gas prices pose a fundamental threat to Biden’s electoral and political ambitions. They have driven confidence in the economy to low levels that bode ill for the defense of Democratic control of the House and Senate in November.
Biden’s past efforts to cut gasoline prices — including releasing oil from the U.S. strategic reserve and greater blending of ethanol this summer — have failed to deliver savings at the pump, a risk that carries over to the idea of a gas tax exemption.
There is little the president can do to fix the prices that are set by global markets, consumer demand and the aftershocks of Russia’s 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.
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