President Joe Biden on Wednesday will call on Congress to suspend federal gasoline and diesel taxes for three months — a move meant to ease financial pressures at the pump that also reveals the political toxicity of high gas prices in an election year.
The Democratic president will also call on states to suspend their own gas taxes or provide similar relief, according to administration officials who previewed his proposals on the condition of anonymity because they were not authorized to speak publicly.
At issue is the 18.4 cents-a-gallon federal tax on gas and the 24.4 cents-a-gallon federal tax on diesel fuel. If the gas savings were fully passed along to consumers, people would save roughly 3.6% at the pump when prices are averaging about $5 a gallon nationwide.
But many economists and lawmakers from both parties view the idea of a gas tax holiday with skepticism.
Barack Obama, during the 2008 presidential campaign, called the idea a “gimmick” that allowed politicians to “say that they did something.” He also warned that oil companies could offset the tax relief by increasing their prices.
High gas prices pose a fundamental threat to Biden’s electoral and policy ambitions. They’ve caused confidence in the economy to slump to lows that bode poorly for defending Democratic control of the House and the Senate in November.