MORGANTOWN – Sens. Joe Manchin and Shelley Moore Capito are among those opposing President Biden’s proposed federal gas tax holiday.
“I’m not a yes right now, that’s for sure,” Manchin said Wednesday in an interview with national media in D.C., shared by his office.
In a separate interview with other national media, shared by her office, Capito said, “I have not been for alleviating the gas tax because of the infrastructure implications there.”
Biden proposed the 90-day suspension of the tax in a Wednesday speech to Congress. The current tax, in place since 1993 is 18.4 cents a gallon for gasoline (18.3 cents tax plus a 0.1 cent Leaking Underground Storage Tank fee) and 22.4 cents for diesel.
Biden said the holiday would last through the summer travel season. Biden said tax revenue is up and claimed that the federal deficit is down, so while it would cost $10 billion, it wouldn’t affect the federal Highway Trust Fund because the hit could be made up with other (unspecified) revenue.
“We can do both at the same time,” he said of building roads and suspending the tax.
“I fully understand that the gas tax holiday alone is not going to fix the problem,” Biden said. “But it will provide families some immediate relief, just a little bit of breathing room, as we continue working to bring down prices for the long haul.”
Biden urged the oil industry to pass along the full cut to consumers. “This is no time now for profiteering.”
Manchin said that when the tax was raised to its current level in 1993, gas was $1.11 a gallon so the tax was proportionally higher than now when the national average is $4.96.
With the price so high now, he said, “Relief is needed in every way possible.” And overall inflation means relief is needed across the board.
Electrical vehicles use the roads, Manchin said, and those owners should be paying their fair share, but a proposal for an EV fee in the Infrastructure Investment and Jobs Act failed. “We couldn’t get that done. Now, not to do that and put another hole into the budget is something that’s very concerning to me.”
He’s willing to talk and listen, he said. But Biden’s proposal would require an act of Congress, signed by Biden. And what member of Congress will vote to end it before the November election?
Congress passed $5 trillion in COVID relief, he said, and that’s all in the past. “All we have now is higher inflation and more hardship on people who need some good decisions here in Congress.”
Capito has opposed a gas tax holiday in her weekly conversations with West Virginia media and said recently, “You know, I oppose a gas tax holiday because number one, the dollars that come in from the gas tax are absolutely critical to maintaining the safety of our highways and bridges. It just is.
“It won’t make as big a difference as getting permitting, more supply, opening up our refining capacity and being more amenable to our actual own domestic production here,” she said. “So, I don’t think erasing the gas tax is the best way to solve a very, very difficult problem. And I don’t think it can be done. It’s really not getting talked about at the federal level. I think there’s a couple bills here, but they’re not going anywhere.”
Republicans regularly cite Biden’s green agenda – canceling domestic drilling leases and halting pipeline construction while relying on foreign oil supplies, among other actions – as contributing to higher U.S. gas prices.
Biden, on Wednesday, blamed the war in Ukraine and greedy oil companies.
“My message is simple to the companies running gas stations and setting those prices at the pump: This is a time of war, global peril, Ukraine. These are not normal times. Bring down the price you are charging at the pump to reflect the cost you are paying for the product. Do it now, do it today. Your customers, the American people, they need relief now.”
Biden also called on the states to enact gas tax holidays. A Democratic effort in West Virginia to suspend the 35.7 state tax failed, with Republicans citing the potential harm to the Road Fund and the relatively small benefit it would offer. The Dominion Post also spoke with three WVU economists who cited the same factors for saying a holiday would offer little benefit.
Congressional reluctance to enact a federal tax holiday is bipartisan at this point, according to news reports. Senate Minority Leader Mitch McConnell is quoted in a floor speech, “The price of gas has risen $2.60 since the Biden administration took office and launched its holy war on affordable American energy.”
And Democratic House Speaker Nancy Pelosi, who has opposed a holiday for some time, is quoted with a noncommittal, “We will see where the consensus lies on a path forward for the president’s proposal in the House and the Senate.”
Part of the reluctance on the Democratic side has to do with the fear that the full tax cut won’t get passed down.
Jason Furman, who chaired President Obama’s Council of Economic Advisers, tweeted, “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. Most of the 18.4 cent reduction would be pocketed by industry — with maybe a few cents passed on to consumers.”
The University of Pennsylvania’s Penn Wharton Budget Model showed in a study that consumers did not see the full effect of gas tax holidays in Georgia, Maryland or Connecticut. Georgia consumers saw 58% of the savings; Maryland, 72%; Connecticut, 87%. The oil companies absorbed the remainder – for various reasons.
The bipartisan Committee for a Responsible Federal Budget also opposes the holiday. It said in February in response to a gas tax holiday bill, “While the gas tax holiday may reduce prices at the pump, it will further increase demand for gasoline and other goods and services at a time when the economy has little capacity to absorb it. The result could be even higher rates of inflation in 2023.”
Tweet David Beard @dbeardtdp Email dbeard@dominionpost.com
