White House Endorses 3-Month Gasoline Tax Holiday

White House Endorses 3-Month Gasoline Tax Holiday

June 22, 2022  | Jeff Davis

President Biden today endorsed a three-month suspension of the 18.4 cent-per-gallon federal excise tax on gasoline. The President made televised remarks at 2 p.m. (transcript here) which urged Congress to pass a three-month fuel tax holiday and also suggested that states match the federal holiday with their own fuel tax suspensions (as well as urging refiners to produce more gasoline and fewer other distillates).

A fact sheet posted on the White House website at 5 a.m. this morning says that the President wants to use “other revenues to make the Highway Trust Fund whole for the roughly $10 billion cost.” That $10 billion number makes it likely that the White House wants both gasoline and highway diesel excise taxes (the latter of which are 24.4 cents per gallon) suspended and will simply suggest that an additional transfer from the General Fund of the Treasury to the Highway Trust Fund be made in that amount (just how $118 billion was transferred from the GF to the HTF by the bipartisan infrastructure bill).

(Ed. Note: It’s easy for the federal government to just print money in a situation like this to cover the lost tax revenue. But state governments can’t print their own money, and since most states use a July 1 to June 30 fiscal year, those states just got done finalizing their budgets, most of which don’t have fuel tax holidays.)

However, there are still big open questions as to whether or not Congress will even vote on the President’s proposed fuel tax holiday. Speaker Pelosi has rejected the idea three months ago and then today issue a statement that did not promise any substantive action, only that “We will see where the consensus lies on a path forward for the President’s proposal in the House and the Senate.”

Transportation and Infrastructure chairman Peter DeFazio (D-OR) condemned the President’s proposal, saying that “encouraging state governments to suspend their gas taxes undermines the impact of the Bipartisan Infrastructure Law by reducing funds available to states to spend on infrastructure improvements.” (Ways and Means chairman Richard Neal (D-MA), who actually has jurisdiction over taxes and tax holidays, has not commented, but Bloomberg News’s Saleha Mohsin reported that Neal “audibly groaned after he was asked about Biden’s proposal”.)

Republican leaders have also been quick to condemn the idea, partly because they see inflation generally and gas prices in particular as a clear political winner for them and don’t want to give Democrats any opportunity to vote for something that looks like it addresses those concerns (even if the plan would not really provide any significant relief to consumers). Sen. John Thune (R-SD), the #2 Senate GOP leader, just called the President’s plan “yet another gimmick, another Band-Aid and something they know is dead on arrival up here in Congress.”

The problem of high gasoline prices is so widespread and so frustrating that policymakers seem to be falling into the old syllogism:

  1. Voters demand we do something about this problem.
  2. X is something.
  3. Therefore, we must do X.

And the White House is not just swimming upstream against Republicans on this – most major media news analysis appears to echo what those of us who follow the gas tax for a living have been saying:

CNN today: A gas tax holiday sounds fantastic. But there’s a reason Obama bashed it as a ‘gimmick’

POLITICO last night: Biden announces a likely doomed gas tax holiday

NPR today: Biden wants a gas tax holiday. Some economists say that’s a bad idea

We hope to have more information on when, and if, a gas tax holiday bill will come to the House floor by the end of this week, when the floor schedule for next week is announced (because Congress is taking the following week off for the Independence Day recess, and a tax holiday is the kind of symbolic thing you hold a vote on right before going to a recess).

1:30 p.m. June 24, 2022 update – The House of Representatives has completed its work for the week without doing anything related to a gas tax holiday. The House will not be back in session for floor votes for two more weeks (there are hearings and markups next week in the House but not in the Senate).

This means that the next regularly scheduled House Democratic Caucus meeting, at which the Speaker might take the temperature of the Caucus as to what to do on this issue, won’t happen until at least July 13, and no vote (if ordered) would take place until after that.

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