Both you and President Biden are in need of assistance. Consumers are frustrated by the 8.6 percent inflation rate and the draining $5 per gallon gasoline costs have on their transportation budgets. The single biggest factor in why Biden’s approval rating is at its lowest point during his presidency is the high cost of gasoline and other goods.
Biden must demonstrate his efforts despite the fact that there is little a president can do to stop persistent inflation. He is requesting that the federal gasoline tax be suspended for three months from Congress.
It’s not a well-liked notion. Greg Valliere, chief strategist of AGF Investments, stated in his morning newsletter on June 22 that “rarely has a presidential plan gotten such terrible reviews.” “This is a horrible idea for a lot of reasons,” These are the first four:
Savings wouldn’t amount to much. 18.4 cents per gallon is the federal gas tax. The price of a 15-gallon fill-up would drop from $75 to $72.24 if Congress delayed the tax and all savings were distributed to consumers, a $2.76 reduction. Every little amount counts, but would anyone care?
Most likely, consumers wouldn’t even receive the whole savings. A few states have eliminated their state gasoline taxes, and according to the Penn Wharton Budget Model, consumers received between 58 and 87 percent of the savings. The remaining savings were kept by the producers. Therefore, prices would decrease by around 14 cents per gallon, or about $2.10 for a 15-gallon fill-up, if customers received, say, 75% of the benefit of a gas tax holiday. Spend it at several different places.
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It might lead to a rise in gasoline demand. Consumers might purchase more petrol if the gas tax break were sizable enough to help their budgets, pushing gas prices higher as a result of the increased demand. Since demand must decline for prices to decrease, that would plainly be counterproductive. But what would be the point if the price cut wasn’t significant enough to increase demand?
According to Yahoo Finance US On June 10, 2022, a gas pump at a gas station in McLean, Virginia, shows the price of fuel. (Image via Getty Images, courtesy of SAUL LOEB/AFP)
The federal highway fund would be used to pay for it. The trust fund used to pay the building, upkeep, and repair of highways and other forms of infrastructure receives direct federal funding through the gas tax. This fund would lose more than $2 billion for each month that the suspension of the gas tax is in place because it is already chronically underfunded. Highway funding is certainly available from other sources, as Biden claims. However, the current climate in Congress is vehemently opposed to deficit spending, which in theory could worsen inflation. Even Biden has stated that the best approach to control inflation is to reduce deficits, not increase them.
Passage is doubtful. The opposition to a gas tax holiday was stated by House Speaker Nancy Pelosi in March. Sen. Joe Manchin of West Virginia, who practically has a veto power due to the Democrats’ slim majority of one vote in the Senate, agrees. A gas tax holiday is “shortsighted and inefficient,” according to Sen. Tom Carper of Delaware, a close supporter of Vice President Joe Biden. For Biden, this is a well-known and frustrating situation: He can’t even get all Democrats to support his preferred plan, and there’s no chance Republicans will save him.
Biden is aware of all this. He is a skilled reader of Congress and is aware that this is yet another Democratic bill destined for the Senate graveyard. That undoubtedly forms part of the strategy. Given the lack of support, Biden wouldn’t be the first president to put forth symbolic legislation. It enables him to claim that he tried while pointing the finger at someone else for impeding small consumer savings. Additionally, since the plan won’t pass, Biden won’t be held responsible for all of its flaws. At least he won’t end up making all the existing issues worse.
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