President Biden called on Congress Wednesday to suspend the federal gas tax, saying it was crucial to reduce the pain Americans feel at the pump. “I promise I’ll do my best to lower the price of energy,” Biden said as images of oil pumps and gas stations flickered on the wall behind him. But the idea of a gas tax holiday was met with outright criticism – not only from members of both parties in the Capitol, but also from many administration officials who said privately that they would probably do little to significantly reduce gas prices. . Senior Treasury officials have expressed doubts about the gas tax holiday, and at least two top White House economists have also expressed private reservations, according to two insiders who spoke on condition of anonymity. Biden’s determination to move forward despite these internal concerns reflects his struggle to tackle an economic landscape that, despite some signs of strength, is causing deep concern to many voters. From declaring inflation “temporary” to describing a recession as “inevitable,” White House officials have deviated from one message to another. They have also urgently called for political action to reduce American spending, despite the fact that they have few obvious policy tools to dramatically reduce the price of gas. Although Biden urged Congress on Wednesday to pass the tax holiday, he called on states to suspend their own gas taxes and demanded that oil refineries produce more fuel, acknowledging the limitations of his policy prescriptions. “I fully understand that a gas tax holiday alone is not going to solve the problem,” Biden said. “But it will offer families some immediate relief, just a little breathing space, as we continue to work to reduce prices for a long time.” How would a gas tax holiday work? Biden has asked Congress to suspend the federal gas tax of 18.3 cents per gallon – and the diesel tax of 24.3 cents per gallon – for three months, a demand that comes just before July 4, when millions of Americans are expected to travel for the holidays. The average cost of a gallon of gas reached nearly $ 4,955 a gallon nationwide on Wednesday, from a record high of more than $ 5 a gallon earlier this month, according to the AAA. But the president’s request is likely to face strong opposition in the Capitol, including from top members of his party who have already made it clear that they oppose a gas tax suspension. It remains unclear what Biden plans to do, if nothing else, to entice lawmakers to support the policy. Speaking to reporters Wednesday, House Majority Leader Steny H. Hoyer (D-Md.) Said he was “pleased” with the president’s request and that lowering gas prices was a “good goal”. But Hoyer joined other Democrats in expressing concern that it may not “have the desired effect on retail prices.” And he said Democratic leaders “do not know” if they have the votes to promote it and have not yet counted. “[Rep. Peter A.] DeFazio [Speaker Nancy] Pelosi, I, we have all expressed reservations about this. “But the president of the United States has suggested it.” “We will see that. “We all agree that the price on the pump hurts working Americans.” But Biden faces the reality that the seemingly intractable problem of rising prices threatens to overshadow his agenda and any democratic political message. Many in the White House have come to the conclusion that the president must at least show that he understands the plight of Americans and that he is doing all he can to help, even if not everything works in the short term. Some vulnerable Democrats celebrated Biden’s announcement. “I introduced my bill to suspend the federal gas tax months ago and I have never stopped working to bring relief to Georgian families at the pump,” Senator Raphael G. Warnock (D-Ga.) Wrote on Twitter. , who faces a tough re-election battle in November. on Wednesday. “I am glad that the President supports this idea and is finally listening to me and my colleagues to take this crucial step.” However, this is not a universal view. Eswar Prasad, an economist at Cornell University, said senior Treasury officials were clear in internal discussions that they believed Americans would likely see only limited benefits from a gas tax holiday, even if Congress were enacted. “The Treasury Department has approached this in detail and people there are realizing that the immediate economic benefits to consumers are likely to be quite limited, while the budgetary implications would be significant,” said Prasad, who has served as an official at the International Monetary. Fund, citing talks with several senior officials. Treasury officials “have expressed concern to the White House that this is not the best strategy for tackling inflation and that the political benefits are likely to be quite limited,” Prasad said. In his remarks Wednesday, Biden said that taking all of his recommended action – suspending gas taxes from Congress and the states and increasing production from oil refineries – could save Americans up to $ 1 a gallon at the pump. . Speaking to reporters this week, Finance Minister Janet L. Yellen offered measured support for the idea and the idea that consumers benefit when the gas tax is suspended. “Many states in the US have reduced their gas taxes, and I think the research suggests that there is a fairly high transfer when a state does it at pump prices – not full, but high enough,” Yellen said. “At the federal level, we have a lower gas tax than at the state level. The data are more mixed. “ He added, “Consumers are really affected by the higher gas prices. It was a burden on American households. And I think that, although it is not perfect, it is something that must be taken into account. “ Members of both parties have also expressed concern about the consequences of the gas tax suspension just months after Congress passed a $ 1.2 trillion bill to improve the country’s infrastructure. Many federal road and highway projects are funded through a trust fund that comes from fuel tax revenues. “The suspension of the federal gas tax will not provide substantial relief to the pump for American households, but will open a multi-billion dollar hole in the Freeway Trust Fund, jeopardizing funding for future infrastructure,” DeFazio said. ), the top MP in the House’s top transport committee, said in a statement before the White House announced its request. Republicans, who generally support any tax cuts, rejected Biden’s proposal as a ploy for the election year. “This ineffective trick will combine President Biden’s other ineffective trick on gas prices: the evacuation of the Strategic Oil Reserve we need in the event of a real national security crisis,” McConnell’s minority leader McConnell told the Senate. -Ky.) Floor. Republicans may also be reluctant to give Biden a victory over an economic issue that is of deep concern to voters five months before the midterm congressional election. But Robert Wolf, the former CEO of UBS Americas and Obama’s chief financial officer, defended the move, including during meetings last week at the White House with top officials. Wolf said he met with Ron Klain, chief of staff, Brian Deese, director of the National Economic Council, and Heather Boushey, a member of the Economic Advisory Board, to discuss the gas tax holiday, among other economic issues. “There are so many tools you have to combat increased gas increases,” Wolf said. “We had three things happen at the same time that are real press events once a decade. We have a combination of the oil embargo of the 1970s, the Gulf War of the 1990s and the post-recession of ’08 to ’09. Gas prices have risen by all three, and we have them all at once. “We really had the perfect storm.” Wolf added that concerns about budget deficits for infrastructure could be alleviated. “We have already reached trillions for Covid relief and tens of billions for the war in Ukraine,” he said. “Are you telling me we can’t do anything for hard-working Americans at the gas station?” Boushey, a proponent of the policy on Twitter, cited research from the University of Pennsylvania that found that consumers benefited from states that introduced gas tax licenses, although the impact of a federal tax suspension would be more limited. “A federal gas tax holiday could help – especially if states follow suit,” he wrote on Twitter, sharing the analysis from Penn Wharton’s budget model. While a federal gas tax holiday may be popular with drivers and could give Biden a slight political boost, economists also say it risks exacerbating the problem. The artificial reduction in prices sends a message to consumers to drive more, which could be a problem at a time when there is still a severe shortage of fuel. “We want fewer people to consume less gasoline because there is a shortage of gasoline and that would encourage more use,” said Mark Zandi, chief economist at Moody’s Analytics. He said he was “sympathetic to the problem they are trying to tackle”, but that a gas tax holiday was “far on the sidelines” in terms of lowering gas prices. It is also unclear whether the gas companies, which have been a regular target of Biden criticism in recent months, will eat up their profits simply because the president says they need to give consumers relief. Energy Secretary Jennifer Granholm is scheduled to meet with oil executives on Thursday to seek solutions to rising gas prices, although Biden will not meet with executives in person. Biden also tried to give the subject an ethic …
