Biden pushes Congress to a three-month gas tax holiday

WASHINGTON – As fuel prices approach an all-time high, President Biden on Wednesday urged Congress to suspend. Federal gas tax Give Americans a “little breathing room” even if the proposal on Capitol Hill faces dim prospects.

In a speech from the White House, Mr. Biden called on Congress to abolish federal taxes – 18 cents a gallon on petrol and 24 cents on diesel – by the end of September, shortly before the midterm elections. The president called on states to suspend their own gas taxes, in the hopes of alleviating the economic pain that has contributed to his declining reputation.

“I fully understand that the gas tax holiday alone is not going to fix the problem,” he said. Biden said. “But it will provide some immediate relief to families. We can breathe a little as we continue to work to reduce prices in the long run.

Critics have questioned the effectiveness of the gas tax holiday, rejecting the idea rather than the White House and vulnerable Democrats’ attempt to show that the party cares about the financial plight of Americans.

Admitting opposition from White House officials, leading Democrats and Republicans in Congress, Mr. Biden said he plans to reach out to both parties and build support – another test of the president’s influence. The party loses the by-election.

Although there was no consensus even among the Democrats, Mr. Biden’s decision is the latest sign of frustration at the White House over even finding modest measures to address an issue that is robbing the president of his support. .

On Wednesday, Mr. Shortly after Biden spoke, Maryland Democrat Democrat Representative and Majority Leader Steny H. Hoyer questioned whether the Democrats had enough votes to move the plan forward.

“Do I think we have the votes? We do not count, ”he said. “So we don’t know yet.”

Kentucky Senator Mitch McConnell, the Republican leader, quickly rejected the president’s call for a tax suspension.

“The big new idea of ​​this administration is a foolish plan that senior members of his own party have already shot down in advance,” he said.

Economists have criticized the government for halting the federal gas tax, saying it would be a futile move, given the revenue sacrificed in an effort to provide less relief to consumers. Its impact on them will be minimal: the tax is now a fraction of the price of the pump, less than 5 percent of the total cost, and Americans will not even notice that it does not exist.

For example, even if all the benefits were passed on to the consumer, if the owner of the Ford F-150 drove a thousand miles a month for 20 miles, it would save about $ 9 if the federal gas tax were stopped.

The administration and some Congress Democrats have been around for months Such suspension was discussed, Republicans are widely opposed to it and accuse the administration of undermining the energy sector. Mr. including Speaker Nancy Pelosi. Even members of Biden’s own party have expressed concern in the past that companies could absorb more savings and leave less to consumers.

He said he wanted to ensure that consumers benefit from the ban on federal taxes. Biden said. The administration estimates that several possible steps – tax cuts, suspension of state gas taxes and an increase in the refining capacity of oil companies – will reduce gas prices by at least $ 1 a gallon.

“I don’t think it moves the needle on people’s desire to buy more, and it doesn’t save them the whole money,” said Garrett Golding, business economist at the Federal Reserve Bank of Dallas. “Something seems to be being done to reduce gas prices, but not entirely there.”

This year, Russia’s invasion of Ukraine, President Vladimir V. Oil and refined fuel prices have risen to a 14-year high due to sanctions imposed on Putin and a resumption of energy use as the United States recovers from the corona virus outbreak. The White House has increasingly sought to blame Russia for the rise in prices A strategy that does little to alleviate stress Among Americans. After reaching $ 5 this month, the national average for regular petrol was $ 4.95 a gallon on Wednesday, according to the AAA.

Mr. Biden has released strategic petroleum reserves and suspended the summer sale of high-grade ethanol blends in a bid to mitigate summer price rises, which climate activists have not yet been pleased with due to the president’s climate and the collapse of the social spending package.

Congress has not increased the federal gas tax since 1993. But it never raised the line. Taxes on petrol and diesel now account for the bulk of federal funding used to build and maintain highways – $ 36.5 billion in 2019 Although in recent years expenses have outweighed commitment revenues.

I.e. Mr. Biden’s latest move to address a political vulnerability could undermine funding for one of his primary legislative achievements during his tenure: investments in infrastructure.

Representative Peter A., ​​Oregon Democrat and chairman of the Transport and Infrastructure Committee. Defacio said the plan would have a “snowball effect” that would delay management’s goals of repairing highways and transportation systems across the United States.

“I do not support it,” he said.

Mr. Biden sought to alleviate some of those concerns on Wednesday. He said the fact that the national deficit had narrowed by $ 1.6 trillion over the past year would provide a breathing room for the administration to suspend taxes. And Jennifer M. Cronholm, the energy secretary, told reporters that the White House would discuss with Congress to reimburse losses caused by the tax. It will cost about $ 10 billion to stop taxes.

“We can further repair our highways and reduce gas prices,” he said. Biden said. “We can do both at the same time.”

Ms. Gronholm will talk to oil company executives this week about lowering gas prices. He did not mention how exactly management would ensure that the savings of the suspension would be passed on to consumers instead of making a profit for the gas companies.

“We will conduct it tomorrow as an honest, enthusiastic conversation asking how we can be partners in providing relief to the people,” she said. Cronhome said the president plans to talk to members of Congress about the proposal in the coming days.

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Progressive and energy experts have suggested alternatives Smooth Gas price shocks or siphon off Oil companies and refineries have taken some ballooning profits while supply is limited. In his campaign for the presidency in 2008, inflation-adjusted prices came even closer to the high point, Hillary Clinton proposed Combining the gas tax holiday with the tax on oil company profits.

But of the limited tools available to the federal government to reduce gas prices, raising taxes would resonate most with Americans.

Erich Muhlecker, an associate professor of economics at the University of California, Davis, said: “This is something that voters are worried about.

Dr. A.S. Muehlegger’s Research has found As part of the media attention generated by those changes, drivers are adjusting their consumptions to changes in gas prices rather than market-based changes of the same magnitude.

New Hampshire Democrat Sen. Maggie Hassan, who is facing a tough re-election attempt, has called on voters to provide relief to voters. Biden said he wanted to go further. In a statement, he said the White House should move forward with a year-round gas tax suspension instead of three months.

“I will continue to press my colleagues in Congress to stop the gas tax and continue to urge the President to take administrative action to immediately reduce household energy costs,” he said.

As states’ taxes and tariffs rise steadily, states have more power to reduce gas prices by an average of about 38 cents a gallon. Three states have so far passed gas tax holidays: Maryland, Georgia and Connecticut. New York Stopped its line Earlier this month, and Florida Raising its line For the month of October.

However, petrol manufacturers and retailers will often reap some benefits. A Analysis of economists With the University of Pennsylvania’s Ben Warden budget model, in states where gas tax holidays are over, 58 percent to 87 percent of the value of the suspended gas tax is paid to consumers, while the rest is absorbed by suppliers. A federal suspension would be too small and could be overshadowed by the evaporating base price of oil that fell last week.

Mr. Biden on Wednesday targeted oil companies and, a few days later, demanded that the refinery be expanded to reduce the cost of the pump. Executives are accused of seeking profit And “exacerbates pain” for consumers. Refineries worldwide have added less than 1 percent of their capacity, despite refineries struggling to keep up with growing demand.

“My message is simple for the companies that run those gas stations and set those prices at the pump: this is war and global risk,” he said. Biden said. “These are not normal times. Reduce the price you charge at the pump.

Emily Cochrane, Katie Edmundson And Stephanie Loy Contributed report.

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