Biden calls for 3-month federal gas tax break

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(UKTN/UKTN DETROTI) — President Joe Biden on Wednesday called on Congress to suspend federal gasoline and diesel taxes through the end of September, calling the move necessary to provide relief to American consumers, but not sufficient to solve the problem of soaring fuel prices. energy price.

Biden’s decision to call for a federal gas tax waiver — a move once derided as a gimmick by Barack Obama and viewed with skepticism by leading economists — is unlikely to pass through Congress, especially as she faces the return of the President’s allies to Capitol Hill. But Biden presented the decision as a way to provide relief to families as he tries to find solutions to one of his main political problems.

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“By suspending the 18-cent gas tax, the federal gas tax for the next 90 days, we can bring the price of gas down and give families a little relief,” Biden said in a speech. of the White House.

The President said: “I fully understand that a petrol tax waiver alone will not solve the problem, but it will provide families with immediate relief, just a bit of respite as we continue to work to lower prices in the long term. .”

Biden also called on states to take action to remove their own gasoline and diesel taxes. And he told oil refining companies to increase capacity ahead of their scheduled meeting this week with administration officials.

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Combined, according to Biden, these measures could reduce the price of a gallon of gasoline by $1. Yet that figure hinges on a number of steps entirely beyond the president’s control, not the least of which is convincing a skeptical Congress to approve his plan.

The president defended a ban on Russian energy imports into the United States after Russian President Vladimir Putin invaded Ukraine – a move Biden acknowledged at the time would raise gas prices. Imports from Russia represent a small share of the US energy portfolio – about 8% in 2021, of which only about 3% is crude oil.

“We could have turned a blind eye to Putin’s murderous ways, and the price of gas wouldn’t have gone up the way it did. I believe that would have been a mistake. … I believed then and I believe now that the free world had no choice,” Biden said.

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He said the American people “get it. The American people have stood up for the moment. The American people have done what they have always done: defend freedom in the world. »

The President said, “For all those Republicans in Congress who are criticizing me today for high gas prices in the United States, are you saying we were wrong to support Ukraine? Are you saying we were wrong to stand up to Putin? Are you saying we would prefer lower gas prices in the US and Putin’s iron fist in Europe? I do not believe that.

The moves are Biden’s latest attempt to show he is taking the initiative to cut fuel prices as Americans grow increasingly frustrated with the financial burden. White House officials have been considering a gasoline tax exemption for months, but have so far delayed in part because of concerns about how it might be received in Congress.

Republicans largely oppose lifting the gas tax. Even some Democrats, including House Speaker Nancy Pelosi, have been cool about the idea. And in the past, top Democratic officials — including President Barack Obama on the 2008 campaign trail — have touted a gas tax exemption as a “trick.”

Yet, in the face of growing anger and the start of the summer driving season, Biden has determined that even small steps bordering on tokenism are worth taking.

“In the conditions we find ourselves in today, this is not a gimmick, this is a bit of respite for the American people as we enter the summer driving season,” said Amos Hochstein, adviser principal for energy security at the State Department, in an interview on UKTN’s “New Day” Wednesday morning.

The current federal gasoline tax is approximately 18 cents per gallon, while the federal diesel tax is 24 cents per gallon. Even if the savings from waiving these taxes were passed directly to consumers – which is not guaranteed – the savings from a fill-up could only be a few dollars.

Even some Democrats have already questioned a gas tax exemption, noting that the tax provides an important source of funding for road construction. Officials said Biden would call for using other sources of revenue to make up for the shortfall, and he worked to allay some of those concerns on Tuesday.

“Look, it will have some impact, but it won’t impact major road construction and major repairs,” he told reporters.

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On Tuesday, Michigan Governor Gretchen Whitmer urged President Joe Biden and Congress to temporarily suspend the federal gas tax.

Following Wednesday’s news, Whitmer released a statement saying:

“Americans are feeling the pain at the pumps with gasoline hitting $5 a gallon this month, so I’m glad President Biden is calling for a temporary suspension of the federal gas tax. If we suspend Michigan’s gasoline sales tax and achieve that as well, we can save families nearly 50 cents a gallon right now.

“Here in Michigan, I am focused on helping families even more by putting more money in their pockets as they face rising prices for everything from gas, groceries and daily expenses. In March, I called for a temporary suspension of the state gasoline sales tax, and last month I proposed MI Tax Rebate Right Now, a plan to send immediately $500 to working families in Michigan I will work across the aisle with the Michigan Legislature and use every tool at my disposal to make sure working families can pay the bills and put food on the table.

“The American people are counting on all of us to bring real relief right now so they can pay the bills and put food on the table.. I am confident that President Biden and Congress can work together to temporarily suspend the federal gas tax, and in Michigan, I will continue to find creative ways to put money back in people’s pockets.

Skeptical economists

Some economists also say the savings passed on to consumers could be minimal, as retailers simply raise the base price of gasoline to make up the difference.

“Whatever you think of the merits of a gas tax exemption in February, it’s a worse idea now,” Jason Furman, a senior Obama administration economics official, wrote on Twitter. “Refineries are even more constrained now, so supply is almost completely inelastic. Most of the 18.4 cent reduction would be pocketed by industry – with perhaps a few cents passed on to consumers.

Senior administration officials acknowledged those criticisms, but said Biden would pressure companies to pass on the savings.

“The president is calling and demanding that industry, businesses and retailers get this to the consumer at the pump,” Hochstein said, without detailing anything specific the president might do to ensure consumers see all of the savings.

“We would look at it and ask the industry to do just that, pass it on,” he said.

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Another official, speaking ahead of the announcement, acknowledged that simply suspending the tax “will not solve the whole problem”.

“It’s something that can be done to take a real step forward in alleviating some of that pain at the pump, and we see it as part of a suite of policies designed to provide that relief, including supply-side policies. “, said the official.

Yet even there, quick action seems difficult. Refining capacity that was reduced during the COVID-19 pandemic would take months to come back online, and refineries are now operating at almost 90% capacity.

“We certainly approach it in a constructive, concrete and pragmatic way. I think again the American people would want their leaders to do that,” a second senior administration official said, noting Thursday’s meeting with seven senior leaders and Energy Secretary Jennifer Granholm.

Biden is looking for scapegoats

The president has been upping the ante on oil and gas companies in recent weeks as gas prices have soared, with the national average topping $5 a gallon at one point last week.

Biden made Russia’s war in Ukraine his main scapegoat for rising gas prices, but also called out oil and gas companies, saying they weren’t doing enough to cut costs and accusing them of profiteering of the war. He repeated some of those arguments on Tuesday, saying the country needed “more refining capacity.”

“This idea that they don’t have oil to drill and pull up just isn’t true,” he said.

In response to the president’s criticism, the oil industry has widely said it’s the Biden administration’s fault that prices are so high due to what they perceive as limits on domestic oil and gas production. gas.

Chevron CEO Mike Worth said in a letter Tuesday that Biden should stop criticizing the oil and gas industry and called for a “change in approach” from the White House.

“Your administration has widely sought to criticize, and at times vilify, our industry,” Worth wrote in an open letter to Biden. “These actions are not beneficial to addressing the challenges we face and are not what the American people deserve.”

Biden responded later that day, “He’s slightly sensitive,” adding, “I didn’t know they would get hurt so quickly.”

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