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Biden urges Congress to suspend federal gas tax for 3 months
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President Biden will urge Congress on Wednesday to suspend the federal gasoline tax of 18.3 cents per gallon for three months, marking the White House’s latest effort to address high inflation and reassure voters that the administration is sensitive to the impact of rising prices on their portfolios.

The announcement, previewed by the White House, will come just days before millions of Americans fill up their tanks ahead of the July 4 weekend trip, though drivers are unlikely see the cuts the president is hoping for by then. Biden will also ask Congress to suspend the diesel tax of 24.3 cents per gallon.

To drive prices down even further, Biden will call on states to suspend their own gasoline taxes. And he plans to urge oil companies and refineries to lower prices for consumers, even if it means cutting back on their own profits.

If all of these things happen, the administration estimates that consumers could save about a dollar per gallon. The average cost of a gallon of gasoline hit nearly $4.97 a gallon nationwide on Tuesday, down from its record high of more than $5 a gallon earlier this month, according to AAA .

Biden will make the decision to suspend the gas tax this week

But Biden’s wish is by no means a guarantee. The president’s request is expected to face fierce opposition on Capitol Hill, including from senior officials in his own party who have already made it clear they oppose a gas tax suspension.

For months, some Democrats and Republicans have questioned the wisdom and effectiveness of the federal gas tax suspension, saying it would do little to help Americans in need. Republicans in particular have called a possible gas tax suspension a political stunt from a president who has seen his popularity plummet as the cost of a range of products rises.

And Republicans may also be hesitant to give Biden a victory on an economic issue that voters are deeply concerned about five months before the midterm congressional elections.

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

Some Democrats have also expressed concern about whether a tax holiday would trickle down to consumers.

“I don’t 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 outside the House Tuesday. White. announcement. “I don’t think that’s going to trickle down to the consumer.”

House Speaker Nancy Pelosi (D-California) 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 exemption. Instead, she and other party leaders have focused on trying to push forward legislation that would punish oil and gas companies for price gouging, arguing that the industry has manipulated prices to reap record profits. .

But that bill, which was approved by the House last month, failed amid Republican opposition in the Senate.

Biden tells oil refiners: produce more gas, less profit

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

Members of both parties have also questioned the political implications of the gas tax suspension just months after Congress passed an estimated $1.2 trillion bill to improve the nation’s infrastructure. Many federal highway and highway programs are funded by a trust fund from fuel tax revenues.

“Suspending the federal gas tax won’t provide meaningful relief at the pump for American families, but it will blow a multi-billion dollar hole in the highway trust fund, putting funding for future infrastructure projects at risk,” said Rep. Peter A. DeFazio (D-Ore.), the lead lawmaker on the main House Transportation Committee, said in a statement before the White House n announces his request.

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

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

But the White House is looking with increasing urgency for action against inflation. Polls suggest voters are deeply worried about rising prices. Most economists think there’s little a president can do to affect the costs of everyday items in the short term, but that’s unlikely to protect Biden’s fellow Democrats in November if inflation doesn’t. shows no signs of slowing down by then.

While a federal gas tax waiver could be popular with drivers and could give Biden a little political boost, economists generally agree that it is more likely to worsen the energy shortage than to help mitigate it. Artificially lowering prices sends a signal to consumers to drive more, which could be a problem at a time when there is still a severe fuel shortage.

Economists say demand must fall for prices to fall sustainably, as oil companies are already producing all they can and shortages are due to Russian sanctions that could extend well into the future.

It’s also unclear whether the gas companies, which have come under criticism from Biden in recent months, will chip away at their own profits just because the president says they need to relieve consumers at the pumps. Energy Secretary Jennifer Granholm is scheduled to meet with oil company executives on Thursday to seek solutions to gas price increases, although Biden will not meet with the executives personally.

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

Although the president has pointed out that the price hike is a direct result of Russia’s invasion of Ukraine – a two-page document on his call for a tax suspension mentions “Putin” four times – the president has also lambasted oil companies and others who he said capitalized on the misery at the pumps.

At an event in California this month, he slammed companies for making ‘more money than God’ as Americans battle rising prices in the wake of a pandemic and the economic repercussions of the Russian invasion of Ukraine. He reiterated that message on Tuesday.

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

Asked about the letter on Tuesday, Biden replied, “He is slightly sensitive. I didn’t know they would be hurt so quickly.

Writer Evan Halper contributed to this report.




Washington

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