Wednesday’s statement by President Biden was that he wanted Congress to grant consumers relief from the federal gas tax during the summer months.
This would mean that the government would cease collecting the tax aEUR 18 cents per galon on gasoline and 24 cents on diesel aEUR until September, which is the peak driving season for summer vacationers.
Biden stated that by suspending the federal 18-cent gas tax for the next ninety days, we could lower the cost of gas and provide relief to families.
It is unlikely that Congress will support the move. Economists warn that even if the change were made, it might not be enough to make a significant impact on drivers and could backfire on the economy.
It is unlikely that gas prices will fall more than a dime due to this change. Jason Furman, who was a key economic advisor to President Barack Obama, said that oil company profits would rise by billions of dollar.
Biden also asked for similar action from state governments regarding their gas taxes. Biden wants to see more gasoline on the markets and for oil refiners’ to increase their capacity. This will help to lower prices.
However, there is no way to force tax cuts to be passed on to consumers.
Carola Binder, associate professor of economics at Haverford College, stated that a tax holiday could encourage more spending at a time where the government is trying to curb inflation.
Binder stated that gas is cheaper, which allows people to purchase more. It gives them a tax cut, which allows them to spend more elsewhere. This will lead to higher inflation elsewhere.
Republicans deplored Biden’s plan. “What the Administration is coming up with, of course is another gimmick and another Band-Aid, something they know is dead upon arrival up here in Congress,” stated Sen. John Thune. 2 Senate Republican Leader.
Biden’s idea was not supported by the Democrats, who have a small majority in Congress.
Chuck Schumer, Senate Majority Leader, indicated that such a bill was unlikely to be passed.
“Recently, Senate Democrats attempted to pass it but it was stopped by Republicans. He stated that he believes the best thing to lower gas prices was to crack down on Big Oil’s manipulation of the gas markets.
Pelosi issues a non-committal statement after Biden proposes a 3-month gas tax holiday. “We will see where consensus lies on a way forward for the president’s proposal …”
Biden and the Democratic Party are in a difficult political position heading into November’s midterm elections. Republicans accuse him of high gas prices, out-of control inflation and other mismanagement. According to polls, Americans are dissatisfied at the way Biden manages the economy.
There is an immediate need for him to act. Reporters were told by senior administration officials that while a gas tax holiday will not solve all the problems, it will give families some relief while they look for permanent solutions.
Biden explained that the price rise was due to Russia’s actions aEUR”, a major oil exporter, after its invasion earlier in the year.
He said that companies that sell gasoline and refine oil need to do more.
He said, “This is a period of war, global danger, Ukraine; these times are not normal.” Reduce the price that you charge at the pump in order to reflect what you paid for the product. Do it immediately. Do it now. They need it now, American citizens, your customers.”
