This would be the latest effort to assist Americans facing rising inflation.
High demand and disruptions in supply chains are driving consumer prices up at the fastest rate in 40 years. Energy costs are experiencing some of the largest increases, with gasoline prices increasing 40% over last year. According to AAA, the national average gas price is $3.49 per gallon. The average price of gas was $2.50 per gallon one year ago.
Emilie Simons, White House assistant press secretary, said that “every tool is on hand to reduce prices”, in response to questions about whether the administration was considering a gas tax holiday. “The president has already announced a historic 50 million barrel release from the Strategic Petroleum Reserve. All options are open looking ahead.”
To provide some relief, a group of Democratic senators have already proposed to waive the federal gas tax. Senators Mark Kelly, Maggie Hassan and Maggie Hassan introduced the legislation to temporarily suspend the federal gasoline tax, which was 18.4 cents per gal., until the end of 2011.
Senator Majority Leader Chuck Schumer said Tuesday that the gas tax was not yet a position of the caucus. “But it is one of the things that we are looking at in terms reducing costs.
While President Biden and Democrats are trying to figure out how to combat inflation, CBS News polling shows that only 35% of Americans consider economic conditions good while 59% consider them poor. This is despite the record 6.6million jobs created last year, and 5.7% economic growth, which was its fastest rate since 1984.
When Americans are asked to rate the economy, they tend to think about their purchasing power. CBS News found that 73% of Americans think about prices for food and services, while 63% think about gas prices. This is more than the impact of the coronavirus epidemic on the economy or the jobs report.
The White House has already taken a number of steps in an effort to ease inflation. Fed officials don’t expect this to slow down until the second half. This means that it will likely be a constant issue for Americans before the midterm elections.
Experts remain skeptical about the impact of the suspension of the gas tax. They claim that even if it were possible, it would provide only limited relief.
Desmond Lachman (senior fellow at the right-leaning American Enterprise Institute) said that “it’s not going do much to reduce inflation.” According to him, Congress and the administration can reduce spending and raise taxes to lower demand to address inflation. However, such moves are unlikely to happen. Although the Federal Reserve indicated that it would raise rates next month, the exact number and rate will still need to be determined.
Howard Gleckman is a senior fellow at the nonpartisan Tax Policy Center. He estimates that suspending the federal gasoline tax would help Americans save approximately $2 per week. This amount is not something people would notice.
Gleckman stated that it was a bad idea. He noted that prices could rise after the tax holiday ends and it would cause a “pothole” in the Highway Trust Fund, which gets a large portion of its revenue from gas taxes.
Experts don’t believe a gas tax holiday will provide relief for every American, but it may not be of any direct benefit. The Committee for a Responsible Federal Budget cautioned that a gas tax holiday could have a negative impact on oil producers and cause higher prices in other industries.
There are also other factors that can impact prices. Experts say that if Russia invades Ukraine, for instance, energy prices could rise regardless of whether a tax holiday is enacted.
While Democrats are considering their options, Republicans have made them more vulnerable to attacks by Republicans who blame Democrats for inflation. The gas tax holiday was not popular on Capitol Hill. They called it a distraction from the “reckless spending” of lawmakers across the aisle. Others in the Senate argue that Democrats want energy prices to rise, and people should look for other options.
