White House takes new look at federal gas tax holiday
by Amie Parnes and Morgan Chalfant - 06/13/22 2:45 PM ET
The White House is showing signs that it is more seriously considering a federal gas tax holiday, sources tell The Hill.
President Biden’s economic team has discussed the gas tax holiday recently and is expected to meet later this week for further talks.
The White House is under political pressure to do something to provide relief to Americans dealing with high inflation and rising gas prices. The economic storm has created serious headwinds for Democrats ahead of the midterms, where the party is worried about a shellacking.
“It’s definitely an option on the table,” said one Democrat close to the White House.
Suspending the federal gas tax would require an act of Congress, but a public push by Biden in favor of the policy could help spur action on Capitol Hill.
Some are pitching the White House on the idea.
Robert Wolf, the former CEO of UBS Americas who served as an economic adviser to former President Obama, said he is supportive of the Biden administration implementing a federal gas tax holiday but only during the period of Russia’s war in Ukraine, which has driven up prices.
He said most of the recent price increases in gas are linked to the Russian war.
“I know that some may view this as somewhat gimmicky because it will revert itself at some point, but a majority of the recent gas hike since the beginning of the year has been due to the Russian invasion,” Wolf told The Hill on Monday. “I think tying it solely to the war and setting an end date makes it more strategic and smart.
“I also think it ties directly into the Putin price hike narrative and aligns well with President Biden’s concern about how inflation is impacting hard-working Americans and he will use every tool available,” he added.
A handful of states have already moved to suspend their gas tax, and Wolf said he would support Biden calling on remaining states that haven’t yet done so to follow suit.
The White House has repeatedly said that nothing is off the table when it comes to combating rising gas prices.
“It’s clear the White House is doing absolutely everything it can right now,” said Josh Freed, leader of the climate and energy program at the centrist Democratic think tank Third Way. “It would make sense that a gas tax holiday is on the table as part of their strategy.”
But Freed and others in Washington say that a federal gas tax holiday would have little impact for consumers.
An estimate from the Penn Wharton Budget Model released earlier this year found that suspending the federal gas tax from March to December of this year would reduce average gasoline spending by between $16 and $47 for that period.
Mark Zandi, chief economist at Moody’s Analytics, said that studies have shown that roughly two-thirds of the tax cut would be captured by energy companies. He also argued that the tax relief wouldn’t be targeted enough to reach lower- and middle-income Americans, noting that wealthy individuals would benefit equally from the holiday.
The money raised by the federal gas tax also helps fund infrastructure projects across the country, meaning that a suspension of the tax could hamper those projects down the road.
“You also run the risk of undermining funding for infrastructure, which is critical for the economy’s long-term growth,” Zandi said.
Still, the idea gained traction earlier this year among some Democrats on Capitol Hill. Sens. Maggie Hassan (D-N.H.) and Mark Kelly (D-Ariz.), both of whom are facing difficult reelection bids, introduced legislation back in February that would temporarily suspend the federal gas tax until next January.
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https://thehill.com/news/administration/3521640-white-house-takes-new-look-at-federal-gas-tax-holiday/
