Joe Biden on Wednesday proposed a temporary fuel tax break to help American motorists deal with the highest inflation in four decades, but critics called it window dressing by an unpopular US president ahead of a difficult midterm election.
Biden asked Congress to suspend the state gas tax for three months as price hikes — largely prompted by the aftermath of President Vladimir Putin’s invasion of Ukraine and subsequent Western sanctions on Russia — fuel broader inflation.
But so far, lawmakers seem unlikely to give his plan the green light.
In a televised address, Biden called for the federal gasoline tax of 18 cents a gallon to be lifted by September. He also called on state governments to suspend their own taxes for the same period.
Noting that gas prices — which now average nearly $5 a gallon — have risen by nearly $2 a gallon since the invasion of Ukraine began, Biden said he’s doing what he can.
“I fully understand that the gas tax exemption alone will not solve the problem, but it will bring immediate relief to families,” he said.
– skepticism –
A handful of states, including New York and Connecticut, have already suspended fuel taxes or postponed planned tax increases.
But some 46 states have yet to act, including Democratic-governed California, where gasoline is the most heavily taxed and most expensive in the country at well over $6 a gallon.
Federal tax revenues on gasoline and diesel help fund the Highway Trust Fund, which is used to maintain roads and support public transportation, but Biden says Congress can ensure the estimated $10 billion gap left by a three-month tax break would be closed from other sources.
Whether Congress — where Democrats hold a slim majority over Republicans — will pass tax breaks is a big question. Even Biden’s supporters are lukewarm.
“I wasn’t an advocate,” Steny Hoyer, a senior Democratic leader in Congress, told Politico. “I just don’t know if it brings much relief.”
Jason Furman, a former top economic adviser to President Barack Obama – who himself once dismissed so-called gas tax holidays as a “gimmick” – also said the move wouldn’t help ordinary people.
“It would be very unlikely that gas prices would fall by more than a penny as a result of this change. And oil company profits would increase by billions of dollars,” he told NPR.
– Biden’s populist mission –
Biden urged gas station retailers to apply any tax cuts immediately, and he urged refiners to expand their crude oil processing capacity in hopes the combined measures could cut gas prices by as much as a dollar a gallon.
He has previously tried other measures, including releasing one million barrels of oil a day from the Strategic Petroleum Reserve, negotiating to release another 60 million barrels from international partners and expanding access to biofuels.
Nothing has had a significant impact so far.
With Democrats fearing a crushing defeat in November’s midterm elections, leaving Biden weakened for the remainder of his first term, the president has embraced an increasingly populist message, portraying himself as a middle-class fighter against profiteer Big Oil.
The White House recently called out corporations like ExxonMobil and Chevron, condemning their profit margins as “well above normal” and calling it their patriotic duty to increase production.
In his remarks, Biden repeatedly emphasized that the blame for the high prices lies with Russia and the oil industry, not with the White House.
“This is a time of war, of global danger, of Ukraine – these are not normal times,” he said, addressing the oil companies. “Lower the price.”
In response to mounting criticism within the Republican Party, he also defended his leadership of the strong Western response to Russia, including highly disruptive sanctions on Russian energy exports.
“We could have ignored Putin’s murderous ways and the price of gas would not have skyrocketed,” he said. “I think that would have been wrong.”
Energy Secretary Jennifer Granholm will meet with refiners on Thursday to urge them to help with these measures, including increasing their production.
Republican National Committee chair Ronna McDaniel was quick to dismiss the president’s speech, saying, “No one buys Biden’s shenanigans, but Americans are paying the price for his anti-US energy agenda.”
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