Biden to call for 3-month suspension of gas and diesel taxes

WASHINGTON (AP) — President Joe Biden will call on Congress on Wednesday to suspend federal gasoline and diesel taxes for three months — a move to ease the financial pressure at the pump that may be driving high gas prices in an election year politically. Also shows toxicity.

The Democratic president will call on states to suspend their own gas taxes or provide similar relief, according to administration officials, who previewed his proposals on condition of anonymity because they are authorized to speak publicly. were not.

The issue is a 18.4 cents-a-gallon federal tax on gas and a 24.4 cents-a-gallon federal tax on diesel fuel. If gas savings were passed entirely to consumers, people would save about 3.6% at the pump, when prices average $5 per gallon.

But many economists and lawmakers on both sides view the idea of ​​a gas tax holiday with skepticism.

Barack Obama called the idea a “gimmick” during the 2008 presidential campaign, which allowed politicians to “say that they did something.” He also warned that oil companies could compensate for the tax relief by raising their prices.

High gas prices are a fundamental threat to Biden’s electoral and policy ambitions. He has been driven to defend Democratic control of the House and Senate in November for poorly eroding confidence in the economy.

Biden’s previous efforts to cut gas prices – including the release of oil from the US Strategic Reserve and greater ethanol blending this summer – have done little to produce savings at the pump, a risk that could be jeopardized by gas. Carries out the idea of ​​tax holiday.

Biden has acknowledged how gas prices have been a drain on public enthusiasm when he tries to convince people that America may still be headed for a clean-energy future. In an interview with The Associated Press last week, Biden described a country already suffering some of the psychological scars from the coronavirus pandemic that is now worried that the cost of gas, food and other essentials How to pick up

“If you notice, until gas prices started rising,” Biden said, “things were much, much more optimistic.”

There is remarkably little the president can do to recover prices set by global markets, profit-driven companies, consumer demand and aftershocks from Russia’s invasion of Ukraine and the aftermath. The underlying problem is the lack of oil and refineries that produce gas, a challenge a tax holiday cannot fix.

Mark Zandi, chief economist at Moody’s Analytics, estimated that much of the 8.6% inflation seen in the US over the past 12 months comes from higher commodity prices due to Russia’s invasion and continued disruptions from the coronavirus.

“In the immediate near term, it is important to contain the rise in oil prices,” Zandi said last week, suggesting that a nuclear deal with Saudi Arabia, the United Arab Emirates and Iran could help boost supplies and lower prices. Can do.

Republican lawmakers tried to put more blame on Biden, saying he created a hostile environment for domestic oil producers, keeping their output below pre-pandemic levels.

Senate Republican leader Mitch McConnell scoffed at the idea of ​​a gas tax holiday in a February speech. “They’ve spent a whole year waging a holy war on cheap American energy, and now they want to use taxpayer money to hide the consequences,” he said.

Democratic House Speaker Nancy Pelosi has previously expressed doubts about the value of suspending the federal gas tax.

Administration officials said the $10 billion cost of the gas tax holiday would be paid for and the Highway Trust Fund would be kept full, even though gas taxes make up a huge source of revenue for the fund. The officials did not specify any new revenue source.

The president also called on energy companies to accept lower profit margins to increase oil production and refining capacity for petrol.

This has raised tensions with oil producers: Biden has decided to make companies “more money than God.” This set off a chain of events in which the head of Chevron, Michael Wirth, sent a letter to the White House, noting that the administration “has tried to largely criticize, and at times condemn our industry.” Is.”

When asked about the letter, Biden said of Wirth: “He’s mildly sensitive. I didn’t know they would hurt their feelings so soon.”

Energy companies are due to meet Thursday with Energy Secretary Jennifer Granholm to discuss ways to increase supply.

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