President Joe Biden and Democratic lawmakers are considering a federal gasoline tax exemption as prices soar to record highs and the party faces an uphill battle in November’s midterm elections.
Two of the most vulnerable Democratic senators in 2022 — Mark Kelly of Arizona and Maggie Hassan of New Hampshire — have proposed a bill that would suspend the federal gasoline tax until Jan. 1, 2023.
The White House is open to the idea as it seeks to tackle the rising prices Americans face at all levels for food, rent and energy.
“Every tool is on the table to reduce prices,” White House spokeswoman Emilie Simons said in a statement to DailyMail.com. “The President has already announced a historic release of 50 million barrels from the Strategic Petroleum Reserve, and all options are on the table for the future.”
The federal gasoline tax is 18.4 cents per gallon for standard gasoline and 24.4 cents per gallon for diesel fuel.
Democrats consider federal gas tax waiver to tackle rising prices
President Joe Biden and the White House are open to the idea as it seeks to tackle the rising prices Americans face at all levels for food, rent and energy
Today’s gasoline average is $3.498 a gallon, according to AAA. California, which has the highest price of any state, is approaching the $5 mark as its average price hits $4,711.
The overall average price of gasoline has increased by $1 over the past year.
The federal gasoline tax, established in 1932, funds the Highway Trust Fund, which in turn funds federal spending on transportation.
However, the Committee for a Responsible Federal Budget estimates that the tax exemption “would reduce gas tax revenue by about $20 billion and could worsen inflation once the exemption expires.”
The Highway Trust Fund faces an annual funding shortfall, in part because the gas tax hasn’t changed since 1993 and more and more people are driving hybrid or electric vehicles that aren’t subject to gasoline tax.
The watchdog group found that, this year, “more than $42 billion in revenue is expected to go to the Highway Trust Fund, more than three-fifths of which will come from the federal gasoline tax.” A federal gasoline tax holiday that lasts from March through December would cut trust fund revenue by $20 billion, cutting the Highway Trust Fund’s revenue stream this year by nearly half.
Larry Summers, a former treasury secretary who has criticized the Biden administration’s handling of inflation, told the Washington Post that a gas tax holiday is “shortsighted, inefficient, goofy and fanciful.” .
“It’s a terrible policy at a time when we have called climate change an existential threat,” he told the newspaper.
At least four other Democratic senators — Debbie Stabenow of Michigan, Catherine Cortez Masto and Jacky Rosen of Nevada, and Raphael Warnock of Georgia — have signed on as co-sponsors.
Cortez Masto and Warnock are also in for tough re-election bids this fall. Democrats are fighting to keep control of the House and Senate. Republicans have made inflation and the high cost of living a major part of their messaging strategy for 2022.
In her statement announcing the bill, Kelly pointed to the high prices Americans charge from the gas pump to the grocery store.
“This bill will reduce gasoline prices by suspending the federal gasoline tax through the end of the year to help Arizona families struggling with high costs for everything from gas at the grocery store,” he said in a statement.
Hassan also pointed to the high prices.
“We need to continue to think creatively about how we can find new ways to cut costs,” she said in a statement.
Two of the most vulnerable Democratic senators in 2022 – Mark Kelly of Arizona (left) and Maggie Hassan of New Hampshire (right) – have proposed a bill that would suspend the federal gas tax until 1 January 2023
The proposal comes as Americans express frustration with the state of the economy, record levels of inflation and the stagnation of the coronavirus pandemic.
Inflation reached 7.5% in January, its highest level in 40 years.
Gallup’s annual Mood of the Nation survey found just 33 per cent are happy with the economy – a drop of 10 points over the past year and a whopping 35 points over the past two years. And only 27% are happy with the country’s energy policy – a low figure that is blamed on high gas prices.
The Biden administration released 50 million barrels of oil from the Strategic Petroleum Reserve in November to help combat high gas prices ahead of the holidays.
But prices remain on the rise and this trend could continue with the cold and the Russian threat against Ukraine.
Oil prices have reached well over $90 a barrel – their highest levels since 2014.
“Recent cold weather in the United States has increased the demand for fuel oil,” AAA wrote in its analysis of gas prices. “Meanwhile, fears that Russia will react to potential Western sanctions by withholding crude oil from the already tight global market is putting strong upward pressure on prices.”