Biden and Democrats consider introducing federal tax holidays through 2023

Biden and Democrats consider introducing federal tax holidays through 2023

President Joe Biden and Democratic lawmakers are mulling a federal gas tax exemption as prices hit record highs and the party faces an uphill battle in the midterm elections in November.

The two most vulnerable Democratic senators in 2022 — Mark Kelly of Arizona and Maggie Hassan of New Hampshire — have proposed a bill that would suspend the federal gas tax until January 1, 2023.

The White House is open to the idea as it seeks to tackle the rising food, rent and energy prices that Americans are facing across the board.

“Every tool is on the table to cut prices,” White House press secretary Emily Simons said in a statement to DailyMail.com. “The president has already announced a historic release of 50 million barrels of strategic oil reserves, and all options are being considered going forward.”

The federal tax on gasoline is 18.4 cents per gallon for standard gasoline and 24.4 cents per gallon for diesel.

Democrats weigh federal gas tax holiday to fight rising prices

Democrats weigh federal gas tax holiday to fight rising prices

President Joe Biden and the White House are open to the idea as it aims to combat the rising prices Americans are facing across the board for food, rent and energy.

President Joe Biden and the White House are open to the idea as it aims to combat the rising prices Americans are facing across the board for food, rent and energy.

Today, the average cost of gasoline is $3,498 per gallon, according to the AAA. California, which has the highest price of any state, is approaching the $5 mark with its average price reaching $4,711.

The overall average gas price has increased by $1 compared to last year.

The federal gas tax, established in 1932, funds the Highway Trust Fund, which in turn funds federal transportation costs.

However, the Committee on a Responsible Federal Budget estimates that the tax holiday “would cut gas tax revenue by about $20 billion and could worsen inflation after the holiday expires.”

The Highway Trust faces an annual funding shortfall, in part because the gasoline tax hasn’t changed since 1993 and more people are driving hybrids or electric vehicles that aren’t taxed on gasoline.

The watchdog group found that this year “more than $42 billion in revenue is expected to go to the Highway Trust, more than three-fifths of which will come from the federal gas tax.” The federal gas tax holiday, which runs from March to December, will reduce trust fund revenue by $20 billion, cutting the highway trust fund revenue stream by nearly half this year.”

Larry Summers, a former Treasury secretary who has been critical of the Biden administration’s handling of inflation, told The Washington Post that the gas tax holiday is “short-sighted, inefficient, stupid and useless.”

“This is a terrible policy at a time when we have called climate change an existential threat,” he told the paper.

At least four other Democratic senators—Debbie Stabenow of Michigan, Katherine Cortez Masto and Jackie Rosen of Nevada, and Raphael Warnock of Georgia—signed as co-sponsors.

This fall, Cortes Masto and Warnock are also in a tough fight for re-election. Democrats are fighting to maintain control of the House of Representatives and the Senate. Republicans have made inflation and the high cost of living a major part of their 2022 messaging strategy.

In his statement announcing the bill, Kelly pointed to Americans’ high prices from the gas station to the grocery store.

“This bill will lower gas prices by suspending the federal gas tax until the end of the year to help Arizona families struggling with the high costs of everything from gas to groceries,” the statement said.

Hasan also pointed out the high prices.

“We need to keep thinking creatively about how we can find new ways to reduce costs,” she said in a statement.

Senator Mark Kelly of Arizona Senator Maggie Hassan of New Hampshire

The two most vulnerable Democratic senators in 2022 — Mark Kelly of Arizona (left) and Maggie Hassan of New Hampshire (right) — have proposed a bill that would suspend the federal gas tax until January 1, 2023.

The offer comes at a time when Americans are expressing their dissatisfaction with the state of the economy, record inflation and stagnation due to the coronavirus pandemic.

Inflation reached 7.5% in January, the highest level in 40 years.

Gallup’s annual Mood of the Nation poll found just 33% satisfied with the economy – a 10-point drop from last year and a whopping 35 points over the past two years. And only 27% are satisfied with the country’s energy policy – a low figure, which is explained by high gas prices.

The Biden administration released 50 million barrels of oil from the Strategic Petroleum Reserve in November to help fight high gas prices ahead of the holidays.

But prices remain high, and this trend could continue due to cold weather and the Russian threat to Ukraine.

Oil prices rose to more than $90 a barrel, the highest level since 2014.

“Recent cold weather in the US has boosted demand for heating oil,” the AAA writes in its analysis of gas prices. “Meanwhile, fears that Russia will react to potential Western sanctions by keeping crude oil in an already tight global market is putting strong upward pressure on prices.”

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