President Biden is hoping to announce his decision by the end of the week.
As we’re all painfully aware, gas prices are sky high, and the upwards trend is showing no sign of letting up. With Americans set to break travel records over the July 4 weekend, President Biden is expected to call on Congress today to suspend federal gasoline and diesel taxes until the end of September.
The move, which would cost about $10 billion and knock about 18 cents off each gallon of gas, would aim to ease the financial burden for consumers over the summer. Here’s what we know so far.
What’s the situation?
As of June 20, the average price of regular gasoline in the U.S. was just short of $5 per gallon — nearly $2 more than it was a year ago. With 42 million Americans planning a road trip of at least 50 miles on July 4, that date has become a focal point in the debate on how to ease the financial burden.
“A federal gas tax suspension alone won’t fix the problem we face, but it will provide families a little breathing room as we continue working to bring down prices for the long haul,” one senior administration official told reporters early on June 22.
“With our deficit already down by a historic $1.6 trillion this year, the president believes that we can afford to suspend the gas tax to help consumers while using other revenues to make the Trust Fund whole for the roughly $10 billion cost,” an official said per NBC.
The president will reportedly ask Congress to arrange the tax pause to minimally impact the Highway Trust Fund, the income for which is generated by fuel taxes.
So what’s the plan?
This is where it gets tricky. The gas tax relief Biden is after requires action from Congress, and as one White House official told NBC, “Republicans don’t want gas prices to come down,” because high prices are bad for Biden.
As Florida Sen. Rick Scott told the Wall Street Journal back in November, surging gas prices and inflation are “a gold mine for us.” A federal tax pause could also interrupt funds for roadway projects that were included in last year’s infrastructure law.
Even support among Biden’s own party is mixed. Per CNN, Treasury Secretary Janet Yellen said that a gas tax holiday was “certainly worth considering,” but emphasized that it shouldn’t be viewed as a cure-all.
Energy Secretary Jennifer Granholm told Dana Bash on CNN’s State of the Union that a gas tax reprieve was one of the “tools” available, but noted the potential effect on infrastructure improvements, explaining: “If we remove the gas tax, that takes away the funding that was just passed by Congress to be able to do that. So you know, that’s one of the challenges, but I’m not saying that that’s off the table.”
As the debate on how to handle soaring prices rages within government, Biden reportedly plans to meet with CEOs of oil companies this week and seek “an explanation [for] how they justify making $35 billion” during the first quarter of 2022.
What are the alternatives?
A potential alternative to the gas tax holiday might be to send Americans gas rebate cards, but not everyone sees this as a realistic option.
When the White House floated the rebate cards idea in May, a House Democratic council dismissed it as an expensive, poorly thought out, disorganized option that could drive inflation and weigh down the IRS.
Senior White House aides are reportedly also concerned that it’d be difficult to prevent consumers from spending the relief cash on other items — not to mention that a shortage of U.S. chips could make producing the cards impossible in the first place.
