Consensus In Washington: Biden’s ‘Very Showbiz’ Gas Tax Gimmick Panned By Everyone

President Biden’s Sudden Desire To Suspend The Federal Gas Tax Has Been Derided By Economists As ‘Shortsighted, Ineffective, Goofy And Gimmicky’ As Well As Inflationary, Questioned By His Own Treasury Department Officials, Rejected By Congressional Republicans, And Dismissed By Prominent Democrats Because It ‘Will Not Provide Meaningful Relief At The Pump’


SENATE REPUBLICAN LEADER MITCH McCONNELL (R-KY): “[On Wednesday,] the Biden Administration announced another ineffective stunt to mask the effects of Democrats’ war on affordable American energy: Calling for a holiday in the federal gas tax. This ineffective stunt will join President Biden’s other ineffective stunt on gas prices: emptying out the Strategic Petroleum Reserve that we need in the event of a true national security crisis, not just a Democrat-fueled inflation crisis. This ineffective Administration’s big new idea is a silly proposal that senior members of their own party have already shot down in advance…. A recent study of past gas tax holidays found that less than 20% of the amount ends up lowering actual prices at the pump. In other words, lifting the 18.4 cent gas tax would mean lowering Americans’ gas prices by just 3 or 4 cents. The price of gas has risen $2.60 since the Biden Administration took office and launched its holy war on affordable American energy. There had already been a substantial increase before the conflict in Ukraine escalated. Now the President wants to trim 3 cents off the top and take a bow? I don’t think so…. I have a better idea: Democrats could stop setting off inflationary spirals, stop proposing massive tax hikes on the brink of a recession, stop waging a holy war against American fossil fuels, and stop applauding the pain that working families are feeling as part of some grand left-wing ‘transition.’” (Sen. McConnell, Remarks, 6/22/2022)


Even Officials In President Biden’s Own Treasury Department ‘Expressed Doubts About The Gas Tax Holiday’ As Did ‘At Least Two Top White House Economists’

“[T]he notion of a gas tax holiday was met with instant criticism — not only from members of both parties on Capitol Hill, but even from many officials within the administration who said privately that it would probably do little to significantly lower gas prices. Top Treasury Department officials expressed doubts about the gas tax holiday, and at least two top White House economists also privately conveyed reservations, according to two people familiar with the internal deliberations who spoke on the condition of anonymity to disclose sensitive conversations.” (“As Biden Touts Gas Tax Pause, Even Some Of His Own Officials Balk,” The Washington Post, 6/22/2022)

  • “Eswar Prasad, an economist at Cornell University, said top officials at the Treasury Department have been clear in internal discussions that they believe Americans would probably see only limited benefits from a gas tax holiday, even if Congress were to enact one. ‘Treasury has been approaching this from an analytical perspective, and people there realize that the direct economic benefits to consumers are likely to be quite limited, while the budgetary implications would be significant,’ said Prasad, who served as an official at the International Monetary Fund, citing conversations with multiple senior officials. Treasury officials ‘expressed concerns to the White House that this is not the optimal strategy to tackle inflation and the political benefits are likely to be quite limited,’ Prasad said.” (“As Biden Touts Gas Tax Pause, Even Some Of His Own Officials Balk,” The Washington Post, 6/22/2022)


Liberal Economists: A Gas Tax Holiday Is ‘Shortsighted, Ineffective, Goofy And Gimmicky’ And ‘Would Also Add To Inflation’

“Lawrence H. Summers, a treasury secretary and top White House economist under previous Democratic administrations, called the idea of a gas tax holiday ‘shortsighted, ineffective, goofy and gimmicky.’” (“White House, Congressional Democrats Eye Pause Of Federal Gas Tax As Prices Remain High, Election Looms,” The Washington Post, 2/15/2022)

JASON FURMAN, Former Obama White House Council of Economic Advisors Chairman: “Whatever you thought of the merits of a gas tax holiday in February it is a worse idea now. Refineries are even more constrained now so supply is nearly fully inelastic…. Needless to say, a gas tax holiday would also add to inflation.” (Jason Furman, @jasonfurman, Twitter, 6/21/2022)


Senate Democrats: A Gas Tax Holiday ‘Is A Shortsighted And Inefficient Way To Provide Relief,’ ‘It Doesn’t Make Sense To Me’

SEN. TOM CARPER (D-DE), Senate Environment and Public Works Committee Chairman: “[S]uspending the primary way that we pay for infrastructure projects on our roads is a shortsighted and inefficient way to provide relief. We should explore other options for lowering energy costs.” (Sen. Carper, @SenatorCarper, Twitter, 6/21/2022)

“Democratic Sen. Joe Manchin III pushed back Tuesday on a proposal by vulnerable members of his party to suspend the federal gasoline tax until after the November elections. Mr. Manchin, a West Virginia moderate who chairs the Senate Energy and Natural Resources Committee, said the proposal amounted to little more than a ‘Band-Aid’ when it came to fighting recent months of sharply higher prices. ‘I don’t think that makes any sense right now,’ said Mr. Manchin. ‘It doesn’t make any more sense than taking oil out of the Strategic Oil Reserve’ — a move President Biden authorized late last year.” (“Sen. Manchin Balks At Vulnerable Democrats’ Push To Suspend Federal Gasoline Tax,” The Washington Times, 2/15/2022)

CNN’s JOHN BERMAN:Is that a yes or no on the gas tax holiday?”
SEN. ELIZABETH WARREN (D-MA): “Look, that’s not the approach I would use. I would use a more systemic approach.” (CNN’s New Day, 6/23/2022)

FLASHBACK: Then-Sen. Obama: ‘We’re Arguing Over A Gimmick That Would Save You Half A Tank Of Gas… So That Everyone In Washington Can Pat Themselves On The Back… This Isn’t An Idea Designed To Get You Through The Summer, It’s Designed To Get Them Through An Election’

THEN-SEN. BARACK OBAMA (D-IL): “We’re arguing over a gimmick that would save you half a tank of gas over the course of the entire summer so that everyone in Washington can pat themselves on the back and say they did something. Well, let me tell you, this isn’t an idea designed to get you through the summer, it’s designed to get them through an election.” (“Obama Dismisses Gas Tax Holiday,” CBS News, 4/29/2008)


House Democrats: A Gas Tax Holiday ‘Is Very Showbiz,’ ‘A Short-Sighted Proposal That … Will Not Provide Meaningful Relief At The Pump For American Families’

HOUSE SPEAKER NANCY PELOSI (D-CA): “The pro is very showbiz. Okay. ‘Let's just do something, there it is.’ But it is not necessarily landing in the pocket of the consumer. It's taken out of the [Highway] Trust Fund. We have to pay for that to return it.” (Speaker Pelosi, Press Conference, 3/31/2022)

HOUSE MAJORITY LEADER STENY HOYER (D-MD): “I’ve not been a proponent of the gas tax [holiday]…. I just don’t know that it gives much relief.” (“Biden Announces A Likely Doomed Gas Tax Holiday,” Politico, 6/22/2022)

REP. PETER DeFAZIO (D-OR), House Transportation and Infrastructure Committee Chairman: “As discussions on possibly suspending the federal gas tax continue, I urge my colleagues to see this for what it is: a short-sighted proposal that relies on the cooperation of oil companies to pass on miniscule savings to consumers … Suspending the federal gas tax will not provide meaningful relief at the pump for American families, but it will blow a multi-billion-dollar hole in the highway trust fund putting funding for future infrastructure projects at risk.” (“Congress Likely To Reject Gas Tax Push,” The Hill, 6/22/2022)


A Recent Study Of Gas Tax Changes At The State Level Found That ‘Just 18 Percent’ Of A Gas Tax Decrease Found Its Way Into The Price Consumers Pay At The Pump

AMERICAN ROAD & TRANSPORTATION BUILDERS ASSOCIATION: “There is a common misconception that a change in state gas tax rates—up or down—automatically triggers a big change in what drivers pay for a gallon of gas. That is not always the case, according to a March 2022 analysis from the Transportation Investment Advocacy Center (TIAC). The study, conducted by American Road & Transportation Builders Association (ARTBA) Chief Economist Dr. Alison Premo Black and TIAC Director Carolyn Kramer, found that on average, just 18 percent of an increase, or decrease, in state gasoline tax rates is passed through to motorists in the retail price of gasoline in the two weeks after a change takes effect.” (“How Changes in State Gas Tax Rates Affect Prices Motorists Pay at the Pump,” American Road & Transportation Builders Association, March 2022)



Related Issues: Taxes, Energy, Inflation